When it comes to buying or selling property in California, transparency is key. Disclosures are the bridge to ensuring that buyers are informed about a property's condition, potential hazards, and financial obligations. Sellers are required to disclose all known material facts about the property, whether obvious or not. However, buyers should not rely solely on the seller’s disclosures. It is essential for buyers to conduct their own thorough investigations.

Buyer’s Responsibility in Property Investigation

When purchasing property, buyers must investigate its condition and suitability thoroughly. This includes assessing physical features, environmental factors, and legal considerations. Sellers and brokers do not guarantee the property’s condition, so buyers must take proactive steps to understand what they are buying.

What to Investigate

1. Property Condition: Inspect the foundation, roof, plumbing, electrical systems, appliances, and overall structure.

2. Size and Boundaries: Verify square footage, lot dimensions, and property lines.

3. Pest and Soil Issues: Check for wood-destroying pests, soil stability, and drainage.

4. Utilities and Waste Systems: Ensure water quality, availability, and proper functioning of sewer or septic systems.

5. Environmental Hazards: Investigate potential risks like lead paint, mold, asbestos, and radon gas.

6. Natural Disaster Risks: Understand the property’s susceptibility to earthquakes, floods, or fire.

7. Permits and Zoning: Confirm building permits, zoning laws, and any restrictions affecting future use.

8. Insurance: Determine the availability and cost of necessary insurance.

9. Neighborhood Factors: Research local crime, schools, transportation, and environmental nuisances.

The inspection contingency period allows buyers to review the seller’s disclosures and perform these investigations to ensure the property meets their satisfaction before proceeding. Buyers must take an active role in verifying all information to avoid surprises.

Why Disclosures Matter

Real estate disclosures are legal requirements that help buyers make informed decisions. They prevent fraud, misrepresentation, and costly surprises after the deal closes. Both sellers and their agents must disclose any known issues that could affect the property’s value or desirability.

Failure to disclose can lead to legal consequences.

Real Estate Disclosures Sellers Must Provide

California law requires several seller’s disclosures, especially for residential properties with 1-4 units. Here are the most common ones:

1. Transfer Disclosure Statement (TDS)
   The TDS outlines the property’s condition. Sellers must disclose issues like leaks, structural problems, or faulty appliances. This document gives buyers a clear picture of the home’s state and is legally required for most sales.

2. Natural Hazard Disclosure (NHD)
   Properties located in areas prone to natural disasters—like flood zones, earthquake fault zones, or wildfire-prone areas—require this disclosure. Sellers (or their agents) must use official maps to identify these risks and include the findings in an NHD Statement.

3. Lead-Based Paint Disclosure
   For homes built before 1978, sellers must inform buyers about potential lead-based paint hazards. They are also required to provide an EPA pamphlet titled “Protect Your Family From Lead in Your Home.” Buyers must be given the option to inspect for lead-based paint during the escrow period.

4. Mello-Roos Taxes
   Properties in special districts may incur additional taxes to fund public services like schools or infrastructure. Sellers must disclose these costs to buyers to prevent financial surprises down the line.

5. Methamphetamine Contamination
   If a property was previously used as a meth lab, sellers must disclose this information. The property cannot be sold or inhabited until it is deemed safe by local health officials.

6. Property-Specific Details
   Additional disclosures may include:

   • Known environmental hazards (e.g., asbestos or contaminated soil).

   • Shared maintenance responsibilities (e.g., for fences or driveways).

   • Additions or renovations done without permits.

   • Zoning or neighborhood nuisances.

   Marketing & Pre-Sale Tips

   • Consider pre-sale inspections to address defects and improve marketability.

   • Disclose all repairs or known issues, even after inspections.

   • Protect valuables during showings and ensure adequate insurance coverage.

   Professional Guidance
   Seek legal or tax advice for implications of selling your property, including withholding taxes and discrimination laws.

   Contractual & Legal Requirements

• Buyers may request repairs, which can influence sale terms.

• Compliance with federal, state, and local laws for smoke alarms, carbon monoxide detectors, and other safety features is mandatory.

Agent Responsibilities in Disclosures

Real estate agents play a critical role in the disclosure process. Here’s what they’re expected to do:

• Conduct a Visual Inspection: Agents must perform a reasonably competent inspection of accessible areas and disclose anything that could affect the property’s value, such as cracks in the foundation or water stains.

• Explain Agency Roles: Buyers and sellers should understand if the agent represents just the seller, just the buyer, or both parties in a dual-agency role. This relationship must be disclosed in writing.

• Facilitate the Disclosure Process: Agents must ensure all required disclosure documents are completed, signed, and delivered to the buyer.

Buyer Protections and Rights

Buyers have significant protections when it comes to disclosures:

• Review Period: If disclosures are provided after the purchase agreement is signed, buyers typically have 3-5 days to review them and decide whether to proceed or cancel the deal.

• Right to Inspect: Buyers can hire professionals to inspect the property for structural issues, hazardous materials, or other concerns. Inspections are encouraged for older, newer, and all homes.

• Recourse for Misrepresentation: Buyers may pursue legal action for damages if a seller or agent fails to disclose known issues.

Diverse Property Types and Local Zones Disclosures

In addition to general disclosures, certain property types or situations require extra transparency:

• Condominiums and Common Interest Developments (CIDs): Sellers must provide governing documents, financial statements, and details on unresolved violations or defects.

• High Fire Hazard Zones: Properties in wildfire-prone areas must meet specific maintenance standards and disclose fire risk.

• Seismic Safety: Homes built before 1960 may require additional disclosures about earthquake safety features like braced foundations and water heaters.

Disclosure Requirements for Commercial and Multi-Unit Real Estate

The Commercial Seller Property Questionnaire (CSPQ) is a critical tool for sellers of commercial properties and residential properties with five or more units in California. This form ensures that buyers receive vital information about the property, such as structural modifications, environmental hazards, permits, zoning compliance, and operational systems like plumbing, electrical, and HVAC. It also covers statutory requirements, such as the use of water-conserving fixtures for properties built before 1994 and earthquake safety standards for older buildings.

By answering the CSPQ, sellers disclose known material facts that may affect the property's value or desirability, ensuring transparency and reducing the risk of misunderstandings. While the CSPQ does not replace professional inspections or buyer due diligence, it is key in facilitating smoother transactions by highlighting potential concerns early. Sellers are encouraged to provide detailed, honest responses, as this form protects both parties from disputes and supports informed decision-making in complex real estate transactions.

Exempt Seller Disclosure (ESD)

The Exempt Seller Disclosure (ESD) is used by sellers exempt from providing a Real Estate Transfer Disclosure Statement (TDS), such as those involved in trust, probate, or foreclosure sales. Despite the exemption, sellers must disclose any known material facts or defects affecting the property through Exempt seller disclosures. Sellers must disclose issues like death on the property (within 3 years), contamination, proximity to industrial zones, military ordnance areas, insurance claims, and title matters. Buyers must sign the form to confirm receipt and understanding. The ESD ensures transparency while emphasizing the buyer's role in thoroughly investigating the property.

Stay Updated and Protected

Disclosure requirements can vary based on the property and transaction type. Consulting a knowledgeable real estate professional or attorney is essential to ensure compliance with California law. Disclosures not only protect buyers but also shield sellers and agents from legal disputes.

If you’re buying or selling property, understanding these requirements upfront will lead to smoother transactions and fewer surprises along the way.

Why Hire Us?

With ever-changing disclosure requirements and ordinances specific to certain neighborhoods—whether it’s being in a fire hazard zone, near a gas line, or in proximity to other environmental risks—it’s essential to navigate these complexities carefully. Deciphering seller disclosures, understanding inspection reports, and knowing how to move forward can be overwhelming without the right guidance.

This is where having an experienced agent makes all the difference. We’re here to help you confidently navigate the intricate process of buying or selling in Los Angeles and its surrounding neighborhoods.

Contact us for a complimentary consultation—we’re more than happy to guide you every step of the way. Let’s work together to make your next move seamless and successful.