You are a homeowner in Palo Alto in the process of selling your home, and the question arises: What do I have to disclose to the seller about the house? As the seller, you do not want to jeopardize your chances of selling the home by telling the buyer about some of the problems. However, California does not follow the maxim of “let the buyer beware,” so if you want to avoid the possibility of a lawsuit in the future, the safe bet is to disclose, disclose, disclose.
California has duties of disclosure from both the common law (those prescribed by case law) and statutes (those codified by the Legislature). These disclosure requirements arise after an offer has been accepted, but before the purchase is finalized.
Under the common law, a seller of real property has a duty to disclose all facts that materially affect the value or desirability of the property. Only those facts that are known or accessible to the seller and not known to the buyer must be disclosed. Examples of material facts include, but are not limited to: building code violations, easements, unpermitted improvements, offensive neighbors, or structural defects. Additionally, if the seller is aware of a buyer’s particular sensitivities or planned future use for the property, the seller must disclose information that adversely affects such sensitivity or future use.
In addition to the common law duties, California has several statutory duties. However, the satisfaction of these statutory duties does not relieve the seller’s common law duties of disclosure. The statutory duties are commonly disclosed in the “Transfer Disclosure Statement,” or TDS. The TDS is a form that the seller fills out, and should be provided by the real estate broker.
The TDS covers such information as: easements, condition and age of the roof, any features shared in common with the adjoining homeowners, unpermitted modifications/additions to the home, flooding issues, neighborhood nuisances, zoning violations, or previous damage to the home.
The disclosures in the TDS must be made in good faith. If the seller does not know certain information, he/she must make a reasonable effort to obtain the information. If they are unable to obtain the information, they may make an approximation if it is (1) reasonable, (2) identified as such, (3) based upon the best information available, and (4) not used to evade the statute in question.
In addition to the statewide statutory disclosures, a seller needs to also be aware of any specific local disclosures of additional items that may be required by the City or County where the home is located. For example, Santa Clara County has certain requirements regarding private well inspection disclosures and open-space easement disclosures. Thus, it is important the seller is aware of the local disclosure requirements, as they can vary greatly by jurisdiction.
The above information is a basic overview of the disclosure requirements in California. If you are selling your home, and have questions about the disclosure process, Brewer Offord & Pedersen LLP would be happy to answer your questions. Brewer Offord & Pedersen LLP can be reached at (650) 327-2900, or on the web at www.BrewerFirm.com.