How Complete a California Seller’s Disclosures Should Be
Although some California sellers think that providing complete disclosures is a lot of work, if you don’t provide a prospective buyer with the disclosure statement at all, the buyer has a right to cancel the sale agreement up to the last moment of negotiations. That would mean that your entire home sale, as well as all of the work you have put into it, could fall through. Besides, buyers tend to be happier with the deal when they’ve been warned of possible issues up front, rather than being surprised by them later.
While the Transfer Disclosure Statement presents a fair number of “yes/no” questions, you will need to provide details on some of your responses. That doesn’t mean describing every little bit of chipped paint or every scratch on the linoleum, however. You are expected to disclose only “material” defects or facts. “Material” in this sense simply means something that is important for or determinative in the buyer’s decision to purchase the home.
For instance, one question on the TDS asks whether there are any significant defects/malfunctions with the floors of the home. If the kitchen floor needs to be cleaned more often than the bathroom floor, this would not be considered “material” and would therefore not need to be disclosed. If, however, the floors in the kitchen were buckling, cracking, or disintegrating, this would be “material” and you would need to disclose it.
A few more examples of things that are considered “material” are if the structure is in violation of any building codes (see, Pearson v. Norton (1964) 230 Cal.App.2d 1, 8-11), if the property is on land that is often flooded or has a high chance of being flooded (see, Stowe v. Nieto (1945) 71 Cal.App.2d 375,377), or if the public sewer system doesn’t connect to the property (see, McCue v. Bruce Enterprises, Inc. (1964) 225 Cal.App.2d 21, 28).
Details that you do not need to disclose include whether a prior occupant had Acquired Immune Deficiency Syndrome (AIDS) or whether someone died on the property, as long as the death occurred more than three years before the current potential buyer’s purchase offer. If, however, a potential buyer asks you a question about any deaths on your property, you must still truthfully answer even if the answer involves an occurrence more than three years in the past. (See, California Civil Code § 1710.2.)
What if you are unsure whether you need to disclose a defect? As a rule, the more you disclose, the better it is for both you and the buyer. Remember, just because you disclose an issue doesn’t mean you are obligated to repair or correct it. The buyer also has the option to correct a problem or to overlook it, if the issue is a minor one. In fact, disclosing more than you necessarily have to can help the deal go through: The buyer’s Realtor, and therefore the buyer, will be happy to see that you have provided a fully completed TDS form; it shows that you are thorough and are taking the home sale seriously.