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What is a Real Estate Transfer Disclosure Statement (TDS)?

Wagner – Real Estate(1)

Residential real estate sales are among the most common major transactions in California. There are nearly 450,000 homes sold in the state each year. As a home purchase is such an important transaction, buyers need to know that they are protected. In California, residential property sellers are required to provide a comprehensive Transfer Disclosure Statement (TDS) to the buyer.

As explained by the State of California Department of Real Estate, a TDS is a form that lets buyers know about any significant defects to the property. Sellers have a duty to disclose comprehensive information about the property. Here, our Riverside residential real estate lawyers explain the most important things to know about mandatory disclosures in California.

Transfer Disclosure Statement (TDS): What You Need to Know

In all U.S. states, residential property sellers are required to make certain disclosures to buyers. Though, California has one of the strongest disclosure laws in the entire country. The mandatory Transfer Disclosure Statement (TDS) requires residential real estate sellers to make thorough and detailed disclosures before a sale is finalized. Among other things, a seller is required to disclose:

  • Any malfunctions or defects on the property;
  • The presence of chemicals on the property;
  • Common neighborhood disturbances, including traffic issues;
  • The existence of easements or encroachments;
  • Flooding issues, drainage problems, and other environmental impacts; and
  • Any outstanding legal claims against the property.

The TDS must be provided to the buyer before the transaction is finalized. A buyer will have an opportunity to review the disclosure statement and ask follow-up questions on any pertinent issues. From there, the buyer can proceed how they see fit. The key legal requirement is that sellers must disclose any material defect. Failure to do so could subject them to liability.

Sellers Can Be Held Liable for Failure to Disclose Property Defects

In California, a residential property seller can be held responsible for damages related to their failure to disclose a material defect. In a failure to disclose case, the Transfer Disclosure Statement is a key piece of evidence. Indeed, it often helps to form much of the basis for a claim. The buyer can use a TDS to establish the representations that were made by the seller. If those representations were inaccurate or incomplete and the buyer suffered financial harm as a result, the property seller can be held responsible.

California Statute of Limitations for a Failure to Disclose Claim

As a general rule, a failure to disclose cases are types of fraud claims. Under the California Code of Civil Procedure § 338(d), fraud actions are subject to a three-year statute of limitations. Notably, the statute of limitations in these cases does not start to run until the time that the aggrieved party (residential property owner) knew or should have known about the alleged defect.

The discovery rule is a very important point in residential real estate failure to disclose cases because often the buyer will not have immediate knowledge of the property defect. As an example, a residential property buyer may not find out about a seller’s failure to disclose a defect with the home’s foundation for many years.

Contact Our Riverside, CA Residential Real Estate Lawyers Today

At Wagner Zemming Christensen LLP, our California residential real estate attorneys provide reliable, aggressive representation to clients. If you have any questions about disclosures in residential real estate, we are here to help. To arrange a completely confidential case evaluation, please contact us today. With an office in Riverside, we represent clients throughout Southern California, including in Moreno Valley, San Bernardino, Jurupa Valley, Ontario, Pomona, and Mead Valley.

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