What follows are our general observations and opinions about the California Transfer Disclosure Statement and how disclosure disputes tend to arise. This is not legal advice, it is not a definitive statement of California law, and every transaction depends on its own facts.
The Transfer Disclosure Statement is the form on which a California seller of residential property tells the buyer what is wrong with the house. As we read the disclosure statutes, most sellers of one-to-four residential units are required to deliver it, the obligation cannot be waived by agreement, and the standard is not what a professional would find but what the seller actually knows.
That last point is the one that decides most disputes we see. The TDS is not an inspection report and the seller is not expected to be an expert. It asks what the seller is aware of. A seller who knew about a recurring leak and left the box unchecked has a problem regardless of whether an inspector could have found it, and a seller who genuinely did not know is in a very different position even if the defect turns out to be significant.
What the form actually asks
The statutory form is short and deceptively broad. It runs through the features present at the property, then asks the seller to identify significant defects in structural components, plumbing, electrical, roof, and similar systems. It then asks a series of specific questions that generate most of the litigation we see, including whether the seller is aware of:
- Room additions or alterations made without required permits, or not in compliance with building codes
- Flooding, drainage, or grading problems
- Any settling, slippage, sliding, or other soil problems
- Neighborhood noise problems or nuisances
- Lawsuits affecting the property, and in a common-interest development, claims against the association
- Substances, materials or products that may be an environmental hazard on the property
In Los Angeles the permit question and the drainage question do the most damage. Older housing stock here carries an extraordinary volume of unpermitted work — converted garages, enclosed patios, additions built in the 1960s and 70s by owners who never pulled a permit and by now may not remember. Hillside properties in Silver Lake, Echo Park, the Palisades and the Santa Monica Mountains bring soil and drainage questions that are genuinely consequential.
The disclosures that sit alongside it
The TDS is not the whole package. A California residential transaction typically also carries a Natural Hazard Disclosure Statement covering fire, flood and seismic zones, a Seller Property Questionnaire in most brokerage-prepared deals, lead-based paint disclosures for pre-1978 housing, and — in Los Angeles specifically — local ordinance disclosures that vary by jurisdiction and by property type. Our general view is that inconsistencies between these forms are one of the first things a buyer’s lawyer looks for, because a fact disclosed in one place and denied in another is difficult to explain as an oversight.
“As-is” does not do what sellers think it does
We hear this weekly. An as-is clause allocates the cost of repair; our reading is that it does not relieve a seller of the statutory duty to disclose known material facts, and it does not immunise an affirmative misrepresentation. A seller who checks “no” on a question they know the answer to has not made the problem go away by adding an as-is provision to the purchase agreement.
What as-is does accomplish is meaningful in its own right — it puts the buyer on notice that the seller is not undertaking repairs, and it strengthens the argument that the buyer accepted the property in its disclosed condition. It is simply not a disclosure waiver.
Our practical advice to sellers
Over-disclose. In our experience the cost of disclosing a repaired problem is a question from the buyer, and the cost of not disclosing it is a lawsuit two years later in which the repair invoice is the plaintiff’s best exhibit. If you fixed a leak, say so and attach the invoice. If part of the house was built without permits and you know it, disclose it rather than hoping the appraiser does not measure.
Two related habits are worth building. Answer in your own words rather than deferring to the agent, because the knowledge the form asks about is yours. And keep the documents — permits, invoices, inspection reports, correspondence with the HOA — because the paper trail that seems inconvenient at listing is usually the thing that protects you later.
If you are a buyer who has found something
Disclosure claims turn on proof of what the seller knew, and the useful evidence is rarely a confession. It is prior permit records at LADBS, contractor invoices, insurance claims, old MLS listings that describe the property differently, and statements to neighbors. Timing matters as well: California limitations periods for fraud and negligent misrepresentation are not generous, and delay is one of the more common reasons a real claim becomes unrecoverable.
We would also be candid that not every unpleasant surprise is a claim. A defect the seller did not know about, or one that was disclosed and overlooked in the inspection contingency period, is often a bad outcome without a legal remedy. We would rather tell you that early than after you have spent money.
Talk to us
If you are preparing disclosures, or you have bought a Los Angeles property and found something you do not think was disclosed, call us at (310) 556-9692. Reviewing a disclosure package before closing is transactional work and we handle it hourly or on a flat fee. If the matter is a genuine disclosure claim after closing, that is litigation, and we generally work on a basis where our fees come from any recovery with costs handled separately, all set out in a written fee agreement. No outcome is guaranteed, and past results do not predict future results.
Related reading: our real estate resources, plus what to do when a seller did not disclose mold, our toxic mold resources, and contract review and drafting.
This article reflects our own general views and opinions and is offered for information only. It is not legal advice, it is not a definitive statement of California law, and reading it does not create an attorney-client relationship between you and our firm. If a disclosure issue affects a transaction you are in, please speak with a lawyer about your particular circumstances.
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