What is the California Real Estate Transfer Disclosure Statement?
The Transfer Disclosure Statement, also known as CA RETDS or just TDS, is required by law. The California Civil Code under Section 1102 (CAL. CIV. §1102.3) requires that every residential seller complete a TDS for the buyer. This document is one of the seller disclosures that buyers receive during their contract contingency period.
TDS is one of the most complex disclosures in California. This form must be completed by the seller, similar to most seller disclosures. An agent should not fill out this form for a seller under any circumstance. In lawsuits brought by buyers against sellers, this document is often used as evidence. And given how comprehensive the document it, it’s important you as a seller fill out this document with an appropriate amount of care and diligence.
What are the different sections in the California Real Estate Transfer Disclosure Statement?
The TDS has 5 sections:
- Coordination with Other Disclosure Forms
- Seller’s Information
- Agent’s Inspection Disclosure – For Seller
- Agent’s Inspection Disclosure – For Agent
- Additional Professional Advice and/or Inspections
Coordination with Other Disclosure Forms
The RETDS must be disclosed with the other disclosures required by the state of California. Depending upon the details seller fill in section 2 of the Real Estate Transfer Disclosure, the seller must provide any inspection reports with pertinent information.
In this Section, the seller has to cover items on the subject property that the seller is aware of, and therefore has actual knowledge of, anywhere from available appliances, leaky roof to whether any deaths occurred on the property in the last three years. Keep in mind that this form is not a warranty, but it is a reliable source of information for the buyer to trust that the seller has disclosed any items not in operating condition. The seller’s Information is broken down further into 4 further sub-sections.
a. Occupancy: Sellers should indicate whether they are presently living in the property.
b. Section A – Appliances Systems and Other Items: Here the sellers disclose:
- All the appliances like kitchen range, dishwasher, central heating/air conditioning, sprinklers, and hot tub.
- Electricity, Gas, and Water supply details.
- Any chemicals on the property — for example, if marijuana or methamphetamine was grown there.
- Major neighborhood disturbances such as rush-hour traffic or adjacency to an airport.
- Any encroachments, easements, or other issues affecting a seller’s interest in the property.
- Any common area—such as a pool or walkway—co-owned in undivided interest with others.
c. Section B – Defects/Malfunctions
- This is intended to cut down on a seller attempting to cover up the home’s defects which includes walls/fences, electrical systems, insulation, flooding, drainage, grading, plumbing, sewers or septic’s problems.
- If you check “yes” to the question that asks if you are aware of any significant defects or malfunctions in any of the following items in Section B, you will need to describe them.
d. Special Questions
This is a lengthy list of 16 yes-or-no questions designed as somewhat of a catch-all to cover what may not already have been addressed in Sections A and B. You should read each question carefully and think before answering. This includes:
- Room additions or modifications to the property.
- Major damage to the property from fire, earthquakes, floods or landslides.
- A homeowner’s association that has any authority over the property.
- Any notices of abatement or citations against the property.
- Fill, compacted or otherwise, on the property or any portion thereof.
Agent’s Inspection Disclosure – For Sellers and Agent
This section is based on “a reasonably competent and diligent visual inspection of the accessible areas of the property.” If you are represented by a real estate agent, your listing agent will complete the agent’s inspection disclosure. A buyer’s agent will complete a separate section.
Under no circumstance should an agent ever check the box that says there are no items for disclosure. There are always items to disclose.
Additional Professional Advice and/or Inspections
Seller signs off this section and allows the buyer to do any additional inspections on the property before buying the house in California
This three-page document is often used as supporting evidence in court when a buyer decides to sue a seller for non-disclosure. That’s why it’s very important that sellers fill it out correctly and disclose pertinent information, which may affect the buyer’s decision to move forward with the purchase.
If you need help preparing a transfer disclosure statement or have further questions, please consult a real estate lawyer.
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Did you know Houzeo provides For Sale By Owners (FSBOs) the relevant Federal and State disclosures?
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