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The basics of California’s transfer disclosure statement

When getting your home ready to sell, it’s not enough to know about house prices in California. You must also be aware of your obligations as a seller, which include producing the necessary paperwork and documents.

Section 1102 under the California Civil Code requires sellers of residential real estate to provide buyers with n accomplished transfer disclosure statement (TDS) during the contract contingency period, which gives buyers enough time to cancel a contract and retrieve their earnest money with no penalties should the transaction fail to satisfy their requirements.

The contract contingency period is meant to protect buyers and minimize the financial risks of buying California real estate listings.

The TDS is a document containing multiple pages. This document conveys important information, including the major defects of a given property.  

Any information stated on the TDS can affect the buyer’s decision to move forward with the sale. The document can also be used in court if the buyer sues for non-disclosure.

What to expect from your real estate attorney

Your agent will help you to the best of their abilities, but when it comes to a document like TDS, it is best to enlist the services of a real estate attorney who is licensed to practice in the state of California. Real estate agents cannot offer legal advice.

An attorney can give you an accurate interpretation of certain sections that may seem vague or confusing. They will also make sure that you supply adequate information and that the document is clear of clerical or typographical errors.

As the seller, you must fill out the TDS form in your own handwriting. Your agent or your attorney can’t accomplish this form for you.

In cases of debilitating illness, disability, prolonged absences, or other circumstances in which you are unable to fill out the form on your own, ask a trusted family member to do it for you.

The buyer will have three days to back out of the transaction upon receipt of the TDS. If you mail them the document, that window may be extended to five days. This is why the date of the TDS’ completion is important.

If there are developments in the sale of the home from the date on which the TDS is completed – like for example, the house sells – you must update the document as soon as possible.

Moreover, some agents try to submit additional disclosure forms that may be redundant or inapplicable to the sale of the home. Your real estate attorney will advise you with regards to the disclosure forms to be sent to the buyer.

What to include in the TDS

Part I of the California Disclosures in Real Estate document has four sections:

  • Seller’s disclosures
  • Real estate agent’s requirements
  • Financing requirements
  • Section on new residential subdivisions

Part II of the form covers business property transfers.
It’s generally advisable to include the buyer’s inspection and pest reports in the TDS by ticking the right boxes. You should also indicate whether or not you currently reside on the property.
Items, features, and defects

This covers appliances and systems found on the property, as well as the property’s structure.

For starters, you must indicate whether the property comes with a dishwasher, gas or electric range, smoke detectors, and a swimming pool, among other features. You must also indicate where these features are located and whether they comply with California laws and other government mandates.

The TDS will ask if water and gas are provided by the city, utilities company, or another source.

As a general rule, you only need to check boxes for items that are applicable to your home. Moreover, if you’re uncertain about the information being requested, such as the age of the roof or the number of volts of the wiring, don’t offer an estimate or make up information.

The form will also ask if the items listed are in working order – if they are not, you should state this in the form.
The document also covers structural integrity. If you state that you are aware of defects in the property, you will be required to describe these defects to the best of your ability.
It’s generally recommended to disclose defects that you deem minor or insignificant, especially if you have knowledge of them. These include cracks in the stepping stones in the front yard, a sagging section of the fence, and similar issues.

Otherwise, the buyer may request that you make changes to the property.
Hazardous materials and other circumstances
Section C of the TDS includes 16 questions about the following issues:

  • Hazardous construction materials (i.e. lead-based paint, asbestos, etc.)
  • Condition of the soil
  • Flooding and drainage
  • Shared property features (i.e. walls, fences)
  • Boundary dispute
  • Neighborhood noise
  • Additions to the property

Ready to sell property in Palos Verdes? Reach out to the Stephen Haw Group at 310.503.9886 or Skh8828(at)gmail(dotted)com for further assistance.