Why did the seller not disclose issues with home we purchased?
Question of the week: Why did the seller not disclose issues with home we purchased?
Answer: Hopefully because they were not required to under California law.
California Civil Code requires that sellers of most residential property types (residential properties with five or more units are exempt) complete a Transfer Disclosure Statement. The purpose of the TDS is to disclose items included with the property, if any are non-operational, known material defects to the property, as well as soil or water issues, noise or nuisances, non-permitted areas, and other items that may be detrimental or cause potential problems for a buyer.
Under California law, the following sellers of properties that would otherwise require a TDS are exempt:
Court-Ordered sales –probate, bankruptcy, foreclosure
Fiduciary sales –trustee or conservator, if the fiduciary did not occupy or own the property in a recent time period
Transfers between co-owners or family –between spouses, parent-to-child, as part of a divorce
Estate administration –executors or administrators selling as part of an estate settlement
Government entities –sale by local, state, or federal government
Whether or not an agent is representing a seller, i.e. a For-Sale-By-Owner, a TDS must be provided to potential buyers for eligible transactions.
It is also important to note, that if the seller is using an agent to represent them in their sale, the agent is also required to complete the TDS based on their knowledge of the property based on communications with the seller, personal visual inspection, and reasonable due diligence if is there appears to be a noticeable issue that may impact the property’s value or desirability. Such items may include water stains on a ceiling, fence with neighbor that obviously encroaches on subject property, airport noise, etc.
If, as a buyer, you purchase a property and an issue comes up that clearly should have been provided on the TDS you have recourse.
You may demand the seller, and/or agent’s broker, pay for repairs to your specification, or otherwise remediate the issue.
If the issue cannot be remediated, such as airport noise or a next-door neighbor that is extremely noisy, aggressive and known to continuously disrupt the seller and other neighbors—such as multiple police interactions, negative personal interactions and threats, excessive barking dogs—civil action can be taken for damages or rescission of the sale.
As a seller, failure to properly disclose issues to a buyer can result in not only actual damages, but compensatory damages for repair costs, diminished property value, or emotional distress. If non—disclosure is found to be fraud, punitive damages may also apply.
As for agents that are found at fault for inadequate disclosure on a TDS, they may face disciplinary action from the California Department of Real Estate, include suspension or revocation of their license. As well, agents may also face financial penalties.
As a buyer, after receiving a TDS, it is very prudent to note any items listed that may cause you an issue as property owner, or potentially as a seller in the future—such as unpermitted improvements—and investigate the possible cost to correct, if possible.
With every purchase transaction, buyers should engage a licensed property inspector to thoroughly inspect the property and its systems. Ensure the inspector has a copy of the TDS before the inspection.
One final, and very important point, if an exempt seller is made aware of issues, material or non-material, to a property as a result of being provided a report from an inspector, they are legally obligated to disclose the issues discovered and presented to them. Failure to do so will be a breech of the Civil Code and subject to the same possible repercussions as if they failed to disclose on a TDS, even if exempt when initially putting the home on the market.
Example, and the reason for the Question of the Week, recently we had a client enter into escrow for a 2-on-a-lot being sold by the children of their parent’s estate. None of the children had lived on the property for decades.
There was no TDS as the sale was exempt. The buyer’s physical inspector noted significant issues with foundations, roofs, electrical and plumbing systems. The buyer presented the report to the listing agent to present to the sellers and requested significant concessions in price and credits for fees to off-set most of their costs to correct the major issues.
The seller’s denied the request and the deal was cancelled.
Moving forward the seller and agent must disclose to potential buyers the issues brought to light by the inspector’s report.
Have a question? Ask me!
Retail sales had a strong month in August. For the third month in a row retail spending had strong increase from the prior month, up 0.6% from July. As with prior months, auto sales increased as in prior months, however, taking auto and gas sales from the data, retail sales increased 0.7% for the month. It needs to be noted, that a factor in the increase in sales is inflation as retail sales data is dollars transacted, not units sold.
A positive sign for the economy, is that restaurant spending increased 0.7% for the month and is up 6.6% over last year for the past three months. Restaurant spending is a very good indicator of consumer expectations as people eat out more often, or have food delivered, when they are confident in their economic circumstances and future.
Normally this data would put upward pressure on rates. However, the data was released on Tuesday and everyone was primarily concerned with Wednesday’s event—the Federal Reserve announcement regarding its benchmark interest rate. The Fed did not disappoint as it lowered the Fed funds rate by the expected 0.25%. Moving markets to some extent was the implication that the Fed would lower rates again at its October and December meetings.
Rates for Friday September 19, 2025: Mortgage rates did not react too much to the Fed announcement as it was already priced into investor decisions. Today rates pushed up from last week as investors re-balanced portfolios.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:
30 year conforming 6.00% Up 0.125%
30 year high-balance conforming 6.25% Up 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
For many years in my office, I had a statement I printed on my wall. It is one we should all try very hard to abide by in all times, but very much so today.
“Listen not with the intent to reply, but to understand.”
To many discussions, interactions, especially those on social media, are between parties that do not try, and more importantly do not care, to understand what the person(s) they are interacting with is trying to convey.
Do not try, nor care, to understand how and why they have that opinion.
Do not try, nor care, to understand the background, environment, values, ethics forming their basis for opinions and ideas.
Everyone has much in common with everyone they meet, starting from their discussions and interactions can move forward if understanding, instead of “winning” or “gotcha-ing,” is the intent.
Be kind, be understanding.
