What to Disclose When Selling Your House in California

Updated on September 30, 2024

In California, there are strict rules about what facts you have to disclose to the buyers of your home. Failing to reveal facts about your house could expose you to a non-disclosure law suit. These lawsuits typically involve claims of breach of contract, intentional misrepresentation, negligent misrepresentation, concealment and fraud. The top real estate lawyers at Schorr Law are here to help you solve and avoid disclosure problems or to bring a forceful remedy in the event that you are on the wrong end of poor disclosures. So please keep reading for some of the top things to disclose when selling your house.

Five Things to Disclose When Selling Your House in California

1. The Form

Every person who sells real estate in California must complete and provide the buyer with a required disclosure form. This form is commonly called the “Transfer Disclosure Statement.” When filling out the disclosure statement you will tell your buyer all sorts of information about the property: the age of the roof, whether the property is attached to public sewer system, or even if there are noise problems in the neighborhood. It is important to fill your form out truthfully and completely or you might find yourself being sued by an angry buyer who belatedly discovers that sticky garage door you never got around to fixing.   The form is codified by California Civil Code section 1102.

2. Property Taxes

When you sell a home in California the local assessor will reassess its value and the taxes on the property will change. As a result, you do not have to tell your buyer what you are paying in taxes at the time of the purchase. However, you do have to provide the buyer with a document that includes particular language telling them that they may be subject to a supplemental tax assessment. The requirements for the disclosure are set out in the California Civil Code Section 1102.6c.

3. Toxic Substances (Asbestos Disclosure)

Filling out the Transfer Disclosure Statement is not the end of your obligation to disclose things to your buyer. You are also required to tell the buyers about any material defect that could harm the value of the property that is not readily apparent to the buyer. That means if you know about a harmful substance in your house such as lead paint or asbestos you have to disclose it. Some of these substances require particular disclosures in order to comply with the law, so be sure to check with your realtor to make certain you are in compliance.

4. Death at the Property

In California, sellers must tell the buyer if a death in the home has occurred anytime in the past three years. This includes death by most natural causes (certain types of deaths, like those from AIDS, cannot be disclosed). If a buyer comes out and asks about a death that occurred at any time, even longer than three years ago, the seller is required to provide a truthful response.

5. The Water Heater Strap

California has earthquakes, and a surprising amount of damage can be done by a water heater tipping over when the ground shakes. Electrical shorts can start fires, hot water can damage your property, and even the falling tank itself can cause damage. As a result, any seller of real estate that contains a water heater must certify to the buyer that the water heater has been braced, anchored or strapped to resist falling due to earthquake motion. The certification is often part of the Purchase and Sale Agreement or the Homeowner’s Guide to Earthquake Safety that your realtor should provide to the buyer.

These five categories of disclosures are by no means an exhaustive list of disclosures.  If you know of anything that would impact the desirability or value of the property you need to disclose it. 

How Long is a Seller Liable for Non-Disclosure?

In California, the length of time a seller can be held liable for non-disclosure or misrepresentation in real estate transactions is influenced by several legal variables, including statutory time limits, the nature of the misrepresentation, and the actions taken by the buyer. Understanding these variables provides a clearer picture of how liability is established and how California’s laws compare to those in other states.

Liability for Non-Disclosure and Misrepresentation in California

In California, sellers are required to disclose material facts that could affect the value or desirability of a property. This obligation is primarily governed by the state’s real estate disclosure laws, most notably the California Civil Code §§ 1102-1102.17. Sellers must complete a Transfer Disclosure Statement (TDS), in which they disclose known defects and other pertinent information about the property. Failure to disclose these material facts can lead to legal liability.

The statute of limitations for a buyer to bring a lawsuit against a seller for non-disclosure or misrepresentation is generally three years from the date the buyer discovered, or reasonably should have discovered, the defect (California Code of Civil Procedure § 338). However, there are nuances. If a buyer can prove that the seller intentionally concealed the defect (fraudulent misrepresentation), the statute of limitations may be extended. In cases of fraud, the statute typically begins when the buyer discovers the fraudulent act, regardless of when the sale took place.  If you are bringing a claim for breach of contract based on the breach of the disclosure aspect of the purchase and sale agreement then the statute of limitations may be extended to 4 years from discovery of the undisclosed condition.

Comparison with Other States

The liability period and the conditions for bringing a claim for non-disclosure or misrepresentation vary widely across states. States such as New York and Texas also impose similar disclosure requirements, but the statutes of limitations and the extent of the seller’s liability can differ significantly.

For instance, in New York, the statute of limitations for claims related to fraud or misrepresentation is six years from the date of the fraudulent act, or two years from when the fraud was discovered or could have been discovered with reasonable diligence (New York Civil Practice Law and Rules § 213(8)). This is longer than California’s statute of limitations, providing buyers with a more extended period to bring a claim.

In contrast, Texas has a statute of limitations of four years for fraud and non-disclosure claims (Texas Civil Practice and Remedies Code § 16.004). Texas also operates under a “buyer beware” principle, or “caveat emptor,” meaning buyers are often required to conduct their due diligence before completing a purchase. The seller’s liability may be less strict in Texas compared to California, where the disclosure requirements are more comprehensive.

Moreover, some states, like Alabama, have much shorter statutes of limitations. In Alabama, the statute of limitations for fraud, including non-disclosure, is two years from the date the buyer discovers or should have discovered the issue (Alabama Code § 6-2-3). This short period puts more pressure on buyers to quickly identify and address any potential issues after a sale.

Factors Influencing Liability Duration

Several factors can influence how long a seller remains liable for non-disclosure or misrepresentation:

1. Nature of the Misrepresentation: If the seller’s non-disclosure is deemed to be fraudulent, the statute of limitations may be extended in many states, including California. Fraudulent concealment typically allows for a longer period during which the buyer can bring a claim.
2. Discovery Rule: The discovery rule, applicable in states like California, extends the statute of limitations from the point of discovery rather than the sale date. This rule benefits buyers who may not realize a defect existed until years after the purchase.
3. State-Specific Regulations: Different states have varying requirements for disclosures, affecting the duration of liability. States with stricter disclosure laws, like California, often impose longer liability periods on sellers.
4. Contractual Agreements: In some cases, the terms of the sale contract may influence the liability period. Sellers and buyers may agree to specific terms regarding disclosures, which can modify the statutory liability periods.

The “As Is” Myth

Many unscrupulous sellers rely on the fact that most sales in California are “as is”. But what does that mean? The answer is simply that the seller is selling the property in its current condition with no obligation to make repairs or improve it based on something the Buyer may want done to the property. What it does not mean is that seller is not obligated to disclose the information that the seller knows. As is does not negate the seller’s disclosure obligation, it just negates their repair obligation about a condition the buyer may complain about during their due diligence period of escrow.

This is by no means an exhaustive list of seller’s disclosure obligations – there are many more items that a seller must disclose that are not covered in this summary blog post. Buying or selling property in Los Angeles, California can be a tricky business. If you are having problems because someone has failed to disclose something during a purchase or need guidance, give a call to our experienced real estate attorneys in Los Angeles. At Schorr Law, our purchase and sale disputes lawyers have years of experience and can help you find a solution to your problems. Call our office today at 310-954-1877 or fill out our contact form here to set up a consultation.