Seller’s Disclosure in California – SleeveUp Homes

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.

What Is a Seller’s Disclosure?

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.

What Laws Govern the Seller’s Disclosure in California?

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.

Common Seller’s Disclosures

Real Estate Transfer Disclosure Statement

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:

• Alterations or repairs that were done without the necessary permits;
• Anything that can lead to environmental hazards (e.g. lead paint);
• Bad wall conditions;
• Bad window conditions;
• Malfunctioning septic tanks;
• Malfunctioning sprinklers;
• Malfunctioning smoke detectors;
• Malfunctioning fire alarms;
• Noise problems;
• Settling or other soil problems;
• Zoning violations.

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.

Local Option Real Estate Transfer Disclosure Statement

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.

Natural Hazard Disclosure

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:

• In a special flood hazard area (type A or V, as designated by FEMA)
• In an area of potential flooding if a dam were to fail
• In a high fire hazard zone
• In a wildland fire zone
• In an earthquake fault zone
• In a seismic hazard zone

Ordnance Location Disclosure Statement

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.

Mello-Roos Bonds and Taxes Area

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.

Industrial Use Disclosure

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.

Termination Rights of a Buyer

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.

Who Is Exempt From Seller’s Disclosure in California?

There are certain situations where you are not obligated to provide a seller’s disclosure. They are:

1. Sales of homes in foreclosure;
2. Transfers by court order;
3. Transfers by the fiduciary of a deceased person’s estate or trust;
4. Transfers to spouses or children;
5. Transfers due to divorce;
6. Transfers between co-owners;
7. Transfers due to unpaid taxes.

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.

Does Selling Your Home Seem Like a Huge Burden?

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.

Author:

Cesar Gomez , Broker /

Cesar has worked as a real estate agent and broker in the southern California region since 2013.

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