A Seller's Duty to Disclose in California

What has to be disclosed

The duty covers two things: what the seller actually knows, and what a reasonable inspection by their agent turns up. It also reaches conditions that materially affect value or desirability. That is a wider test than defects in the structure. A problem can cut value, or make the home less appealing to a buyer, without being a defect in the structure at all.

Water getting in, and the history of it. Foundation and drainage problems. Unpermitted work, meaning work done without a permit, even where the work itself was done well. Boundary and easement disputes with neighbors. An easement is a right someone else holds to use part of your land. Lawsuits affecting the property. A death on the property within the period the statute sets. Neighborhood conditions the seller knows of that a buyer would not find on their own.

The Transfer Disclosure Statement, or TDS, is the form that Civil Code sections 1102 and following require. Sellers make one mistake with it more than any other: they treat the form as the whole of the duty. It is only a floor. If you know a material fact, meaning a fact that would matter to a buyer, you still have to disclose it. That holds true even when no question on the form asks about it.

What is not covered

The duty runs to what the seller knows. It is not a warranty, meaning a promise, that the property is sound. A defect nobody knew about is usually not a nondisclosure claim, whatever it costs to fix.

That is why these cases turn on knowledge. The fight is rarely about whether the problem exists. It is about what the seller understood, and at what point. You prove that from paper, not from what anyone says now.

Where the evidence comes from

Prior repair invoices and contractor estimates. Insurance claims on the property. Permit records at the city or county, which show what was permitted and, by what is missing, what was not. Prior listings, where the same property was marketed years earlier. The photographs and wording from back then sometimes contradict what the seller discloses now.

Neighbors are often the most direct source. A drainage or boundary problem that has run for years is usually known up and down the street.

The file kept by the seller's own agent matters too. Agents have disclosure obligations of their own. A file showing the agent knew makes for a different case than one showing only the seller knew.

What to do on discovering something

Record the condition before anyone repairs it, with dated photographs. Where the defect is structural or involves water, get an inspection report as well. Repairing first and asking later wipes out the evidence of what was wrong.

Keep the disclosure package exactly as it was delivered. That includes the TDS and any addenda, which are the added pages. It also includes the agents' visual inspection disclosure, the agents' own written note of what they saw. What was and was not disclosed sits at the center of the case.

Before you do anything else, read the purchase agreement to see whether it requires mediation or arbitration. Mediation is a meeting with a neutral person who tries to settle the matter. Arbitration is a private hearing that decides it. Most California residential agreements require mediation first. Going ahead without it can affect whether you recover attorney fees later.

What the Transfer Disclosure Statement actually asks

The statutory form walks through the property system by system and asks about known defects in each. The list covers structural components, the roof, plumbing, wiring, heating and air conditioning. It also asks whether the property has features such as a pool, a well or a septic system.

It then asks whether the seller is aware of a set of specific conditions. Substances or materials of environmental concern. Additions or alterations made without permits, or made in a way that does not comply with building codes. Settling or soil problems. Flooding or drainage issues. Damage from earthquake, fire or landslide. Neighborhood noise. And any lawsuits affecting the property.

It asks whether the seller is aware of problems in the common areas, and of any notices of violation, meaning official notices saying that something does not meet the rules.

The seller signs the form, and the agents fill in their own portions. The agents' visual inspection disclosure is a separate obligation of theirs. It is often the more revealing document. An agent who noted a condition has created a record, and the seller cannot later say it did not exist.

The evidence that decides these cases

The dispute is almost never about whether the defect exists. It is about what the seller knew, and when. Documents settle that, and there is a standard list worth working through.

Permit records at the city or county. They show what was permitted, and what is missing shows what was not. Unpermitted work is one of the most common nondisclosure claims, and the permit file is open to the public.

Prior repair invoices and contractor estimates. These often survive in the seller's own records, or in the contractor's.

The insurance claims history on the property. It is hard to square a prior water damage claim with a disclosure saying the seller knew of no water intrusion.

Prior listings. A property marketed five years earlier may carry photographs and wording that contradict the current disclosure. Old listings stay around.

Neighbors. They usually know about a drainage, boundary or noise problem that has run for years, and they have no reason to be coy about it.

Before you repair anything

When you find a defect, the instinct is to fix it, above all where it is causing damage. But repairing destroys the evidence of what was wrong. The condition as you found it sits at the center of the case.

Photograph everything before work begins, with dates, including areas that will be closed up again. Obtain an inspection report from a qualified inspector or engineer. Ask them to describe the condition and, where they can, its likely age and cause. Age matters. A defect that plainly predates the sale is hard to pin on the buyer.

Keep the materials that come out, where that is practical. Keep every invoice.

Where a repair truly cannot wait, the documentation matters more, not less.

Mediate before you file

Most California residential purchase agreements contain a mediation provision. In many of them, you keep the right to recover attorney fees only if you tried mediation before you filed.

A buyer who files first can win the case and still lose the fees. On a claim of moderate size, that can mean the money you recover does not cover what you spent to get it. It is the most common procedural error in residential real estate disputes, and the easiest one to avoid.

Read the fee provision and the dispute resolution provision in your own agreement before you take any step. If you initialled an arbitration provision at purchase, that also settles where the matter is heard.

This article is general information about California law and is not legal advice for any specific situation. If you are dealing with this issue, the facts of your matter will change the analysis.