Buying a California Home: What Does the Seller's Disclosure Form Tell Me?
Learn from reading the California home seller's disclosure form -- and what to investigate further.
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If you are a home buyer looking at properties in California, you’ve probably received some written disclosure statements from sellers of properties that you’re particularly interested in (or from their real estate agents). These disclosures should include a Transfer Disclosure Statement, among other documents.
Typically provided on standard forms, such disclosures are mandated by law and designed to provide you, the buyer, with detailed information to help you make an informed decision about your property purchase. The disclosures in California can be very extensive and are mainly related to the seller's knowledge of the physical condition of the property. (See, California Civil Code Sect. 1102.)
Types of Disclosures You Might Receive
California law requires that sellers be thorough in their disclosures, so you may receive a wealth of information even before you're sure you're definitely interested in a property. This is actually a good thing!
Don’t worry that receiving disclosures means there must be a serious issue with a home: Sellers often choose to “over-disclose” to ensure that you have as much information as possible, and to make sure they’ve covered their legal requirements.
One form you should always expect to receive from the seller is the Transfer Disclosure Statement (TDS), which covers a broad range of topics about the home, from structural information to whether there have been any deaths there in the last three years.
Another seller-generated form to look for in California is the Natural Hazard Disclosures Report/Statement, which provides information about the property’s location in relation to earthquake faults, flooding zones, and other natural hazards.
What to Look for in the Disclosures
The seller should be disclosing “material facts,” or, things that you would consider important in deciding whether to purchase the home. For example, the square footage of a structure and whether it has any structural defects qualify as material facts.
Depending on the details of a home, including its location and history, you might also receive disclosures regarding the presence of hazardous or toxic substances or the need to pay supplemental property taxes. Further, common disclosures can include work and upgrades that a seller has performed on the property, and even the existence of pets. Additionally, the known existence of termites, neighborhood nuisances, a history of property line disputes, and any malfunctions with a home’s major appliances will be items you might find addressed in a seller’s disclosures.
When reviewing the disclosures, bear in mind that the seller may not know everything about the property. For instance, a seller who has been living in the home might have a more detailed knowledge of it the property than one who just recently inherited it, particularly if it has been sitting empty for a while. And even sellers who live in a home for years may have become blind to its problems or, for example, may have never looked into the attic or crawlspace.
The bottom line is that sellers who check “No” in answer to the many TDS questions about whether they are aware of particular problems haven’t given the property a definitive clean bill of health. They’ve only stated the limits of their knowledge.
Even if, however, the seller has been living in the home for years and seems to know a good deal, it’s always a good idea to obtain an independent home inspection from a professional. A long-time homeowner can accidentally overlook potential issues to which he or she has become accustomed.
Using the Information in the Seller’s Disclosures
Based on the information you receive in the disclosures, you’ll likely want to perform some follow-up research. To start, you should hire a home inspector to inspect the entire property. Be sure to make him/her aware of the information in the disclosures, most likely by providing a copy of the forms. This will let the inspector know about any particular areas of the property that might need a closer look. Something else you can do to ease your mind is to cross check any permits listed on the form with the city’s permit files to make sure they match up.
Another important follow-up step to receiving these disclosures is to ask questions – let the disclosures work for you! If you need clarification on something in a disclosure document, or if a particular disclosure raises a new question or concern in your mind, ask your real estate agent or broker, or the seller’s agent for further information to help you sort things out. You can also, depending on your question, ask your home inspector or other professional such as a plumber or roofer.
Remember, just as California law requires a seller to provide you with disclosures, you are also required, as a buyer, to pay attention to details of the property through your own observations as well as through other readily accessible information. It is never a good idea to solely rely on what the seller discloses but it is always a good strategy to use this information in performing your own research and obtaining your own inspection(s).
For further information, a local California real estate broker is qualified to advise you on real estate matters. For legal advice, consult your attorney.