✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
95% of homebuyers discover issues with their properties after the closing process. 60% of sellers do not disclose defects in their homes to potential buyers. Hiding defects whether intentionally or not can lead to potential lawsuits in California.
A seller disclosure is a document that informs the buyer about defects in a house. So you must fill this document accurately and honestly. It helps with offering legal protection, enhancing credibility, and reducing complications during the home inspection process.
If you wish to sell your home in the Golden State, enlist the help of a Flat Fee MLS service like Houzeo. Your home will be on the MLS in 24–48 hours. Houzeo automatically assigns the right disclosure paperwork which makes the selling process hassle-free.
- ✍️ Is Seller’s Disclosure Required in California?
Yes, you must fill out the Seller’s Disclosure Notice provided by the California Association of Realtors (CAR).
What Is a Seller’s Disclosure?
A seller’s disclosure is a legal document that homeowners must give to potential buyers. It contains information about the property’s condition, history, and any known issues that could impact its value or safety.
Moreover, seller disclosure ensures transparency in real estate transactions. It also helps to minimize legal risks and attract serious buyers. Overall, it makes the selling process smoother.
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What Does a Seller Have to Disclose in California?
Here are the things you have to disclose to sell your home fast:
- Real Estate Transfer Disclosure Statement: You need to disclose any known material defects or issues with the property. This form covers a wide range of aspects, including the condition of appliances, the plumbing system, the roof, and other structural components.
- Natural Hazard Disclosure: You should reveal if the property is located in an area prone to natural hazards. However, this information helps buyers assess potential risks associated with the property.
- Lead-Based Paint Disclosure: You need to provide information about the presence of lead-based paint and related hazards. Furthermore, the buyer has the right to inspect for lead-based paint.
- Megan’s Law Disclosures: You must inform buyers if the property is located near a registered sex offender. However, this disclosure provides buyers with neighborhood information.
- Homeowners Association Disclosures: If the property is part of a homeowners association, you must provide relevant documents, including financial statements. You’re also required to inform about any pending legal actions involving the HOA.
- Smoke Detector and Water Heater Compliance: You must certify that smoke detectors and water heaters comply with state law requirements.
What Do Sellers Not Have to Disclose?
You can omit the following information from the seller disclosure form in California:
- If someone died on the property more than three years before a potential buyer’s offer.
- If you consider your property haunted or it is haunted.
- Anyone who lives on the property has AIDS or HIV.
What Are Exemptions to Seller Disclosures in California?
There are some sales or transfers where the sellers need not submit the California Transfer Disclosure Statement (TDS) to their buyers or transferees. These are as follows:
| Sr. No | Exemption |
|---|---|
| 1. | Transfers that are made before furnishing public reports under Section 11018.1 of the Business and Professions Code, or made without Section 11010.4 of the Business and Professions Code. |
| 2. | Sales that are made due to a court order, for instance, sales arising from the administration of an estate or foreclosure. |
| 3. | Transfer from the mortgagor to a mortgagee, or transfers under a foreclosure sale made after default in mortgage, deed, or trust. It can also be made by a mortgagee or beneficiary who has acquired the property in lieu of foreclosure. |
| 4. | Where the transferor is an executor of a will or a fiduciary administering trust, guardianship, or conservatorship. |
| 5. | Transfers from one co-owner to one or more co-owners. |
| 6. | Any transfer made to a spouse or person/s in the lineal line of consanguinity. |
| 7. | Where the transfer results from a decree of divorce, legal separation, or settlement agreement between spouses. |
| 8. | Transfers administered by a Controller of Unclaimed Property. |
| 9. | Any transfers carried out by a collector of a tax-defaulted vacant residential property, or where the property is deeded for taxes to the state, county, or public agency under the California Revenue & Taxation Code. |
| 10. | Where a government entity is a buyer. |
| 11. | Transfer a portion of the property that is not a single-family residence. |
| 12. | A sale for a limited duration. |
Penalty for Forgetting to Mention Facts in Seller Disclose Form
In the U.S., omitting facts in a seller disclosure form can lead to fraud liability and penalties. Buyers may take action through rescission or pursue damages. Criminal charges are rare but possible in extreme cases.
Moreover, you should adopt a proactive strategy to avoid legal issues in California real estate transactions. This involves disclosing all material property facts accurately. You can also seek guidance from a real estate attorney to avoid any errors.
Consequences of Lying on California Seller’s Disclosure
You will face severe consequences if you lie on the California Seller’s Disclosure Notice. Buyers receive accurate information about the property’s condition through this legal document.
If you state false or misleading information on the disclosure, you may face legal action. However, the buyer could seek damages for undisclosed defects.
You may also face civil penalties, including fines if you fail to disclose known defects. Furthermore, negligent misrepresentation or fraud claims may hold you liable.
Tips to Minimize Issues in California Seller‘s Disclosure Form
Here are the tips to save you from any legal issues:
- Complete a Pre-Sale Inspection: Conduct a pre-sale home inspection before you sell your home. It will help you to identify and address issues. This also helps build trust with potential buyers.
- Review the Sales Contract Carefully: Check provisions about seller disclosure in your contract. However, failure to disclose can lead to legal issues. It can also cause the sale to collapse.
- Document Everything: Keep records of any repairs, renovations, or maintenance done on the property. Moreover, this paperwork is proof that you’ve dealt with known issues.
- Disclose Everything: To avoid problems in your home disclosure statement, you should disclose everything. Also, a minor issue could turn out to be important.
- Consult with Professionals: If you’re unsure about what needs to be disclosed, seek help from real estate attorneys. They are familiar with local laws and practices and can help you handle any issue.
Bottom Line
Transparency is key when filling out seller disclosure documents. It requires you to reveal known material defects in a property. However, providing false information on the form may lead to legal repercussions.
You can access all the seller disclosure forms on Houzeo. The platform has segregated all the disclosures state-wise, so you don’t have to hunt for California seller disclosures separately.
Frequently Asked Questions
Does California require a seller's disclosure?
Sellers need to fill out the Seller's Disclosure Notice when selling their house in California. You need to disclose facts and defects about the property. You need to check off all the questions and also fill a few sections of the form manually to provide additional details.
What is a closing disclosure in real estate?
Closing disclosure is a form that gives details about the mortgage loan you select.
What types of issues should be disclosed by the seller?
Sellers in California are required to disclose material facts that could affect the value or desirability of the property. This includes information about the property's physical condition, any known defects, legal issues, and environmental hazards.
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