Selling a home is not an easy process and it gets all the more complicated when you realize all the intricacies involved. Besides looking for potential buyers and negotiating prices, you need to protect yourself legally from any mishaps. A seller’s disclosure in California is one of the tools that protect you from lawsuits.
But more than that, a seller’s disclosure is obligatory in California. Without it, you can face severe repercussions. So, what is it? What are types? What should it include? By the end of this article, you should be able to answer all of these questions yourself and know what to do when you decide to sell real estate property.
As the seller of real estate property, you are legally obligated to inform all buyers of the material facts of your property to the best of your knowledge, particularly of those facts that could lower the material value of the property. This legal document, where you list everything you know about your house, is colloquially called a seller’s disclosure.
In other words, a seller’s disclosure is the document you use to notify potential buyers about any deficiencies to your property that could make them change their minds about buying (or buying for the price you listed). Anything relevant needs to be listed, from a malfunctioning HVAC system to termite infections.
The seller’s disclosure in California is governed by Section 1102 of the California Civil Code. We would always advise you to read the entire bill if you are planning on selling your house or consult a real estate attorney. However, as the bill is quite exhaustive and covers other things than seller’s disclosures, let’s give a rundown of what types of disclosures exist.
We should also note that you and a buyer can make an additional agreement where you decide what other disclosures the document needs to contain, other than those which would normally be expected. With that out of the way, let’s list the most common types of seller’s disclosures in California.
This document is the one most people refer to when talking about a seller’s disclosure. In this document, you describe, in detail, the condition of your property. You need to deliver this document to prospective buyers as soon as possible. It should contain everything defective about the property.
And we do mean everything. Here are just some of the items (and their conditions) that can be included in the document:
We reiterate, the document needs to contain all factors that may have an adverse effect on the buyer’s desire to purchase your property.
If you wish to limit your liability when creating a closing disclosure, you can hire a professional, like a land contractor, engineer, pest control operator, etc. to make a report for you. In this manner, the burden is mostly on them to disclose everything that needs to be disclosed.
Cities or counties may legislate that additional information needs to be included in your disclosure, information that would not necessarily be required pursuant to California Civil Code 1102. Thus, it is advisable to check your local laws or consult with a professional.
In addition to the previous two disclosures, you also need to inform your buyer of whether the property is located in an area prone to natural hazards. You need to disclose if your home is located:
You need to inform a potential buyer if your property is located in an area that was once used for military training and could contain live ammunition. The potential area is up to one mile from the actual area where the military training was conducted.
The Mello-Roos Act has created several tax districts in California where local governments can sell bonds to fund public works. If your home is located within one of these areas, you need to inform buyers of the special taxes or liens they would need to pay.
Multiple areas of California are designated for industrial use. If the property you are selling is located in such an area, is adjacent to one, or even experiences problems because of the use of such an area, you need to inform your buyers.
We should note that a buyer has the right to terminate a purchase agreement even after it is signed if they received the seller’s disclosure after the signing. If the disclosure is delivered in person, they have 3 days to terminate the contract and 5 days if the disclosure is delivered by mail.
There are certain situations where you are not obligated to provide a seller’s disclosure. They are:
Thus, in some instances, you may not be required to create any type of seller’s disclosure, yet you are opening yourself up to a lawsuit if you are not 100% sure you fall into one of the exempt categories. Once again, the safest option is to consult a professional.
SleeveUp Homes can help. We buy houses as-is for cash and pay top dollar. You do not need to worry about any damage your house has and how you need to inform us - we’ll personally do an inspection and repair any damage in-house.
From start to finish, we’ll guide you through the process. On top of that, we are direct buyers that don’t work with realtors, so you won’t be paying any realtor commissions, which leaves more money in your pocket. But don’t rush to make a decision - order a no-obligation cash offer, see how much you can get, and let’s start from there.
If you want to sell fast and are worried about how long the traditional process takes, and the commission and fees involved, consider working with SleeveUp Homes.