📋 Transfer Disclosure Statement (TDS) Requirements
California law requires sellers of residential real property (1-4 units) to provide buyers with a Transfer Disclosure Statement (TDS) disclosing all known material facts and defects that could affect the property's value or desirability. Failure to make required disclosures can result in liability for damages or rescission of the sale.
When TDS is Required
A Transfer Disclosure Statement is required for:
- Sales of residential property with 1-4 dwelling units
- Sales involving single-family homes, condos, and townhomes
- Most real estate transactions (with limited exceptions)
📝 Form Required
Sellers must complete the standard TDS form (Civil Code 1102.6) covering property condition, systems, and defects.
🔍 Material Facts
Sellers must disclose all material facts - anything that would affect a buyer's decision or the property's value.
🏠 Agent Duties
Real estate agents must conduct a visual inspection and disclose observable defects (Easton v. Strassburger).
⏰ Timing Matters
TDS must be delivered before contract signing. Buyers can rescind within 3 days if delivered later.
⚠ Exceptions to TDS Requirement
TDS is NOT required for:
- Court-ordered sales (foreclosure, probate, bankruptcy)
- Sales by fiduciaries (trustees, conservators)
- Sales between co-owners
- New construction never occupied
- Sales to the state or government entity
However, even exempt sellers may be liable for fraud or intentional concealment.
📝 Required Disclosures Under Civil Code 1102
The TDS form requires sellers to disclose information about the following categories:
Key California Statutes
Civil Code Section 1102
Establishes the duty of sellers of residential property (1-4 units) to disclose material facts about the property's condition to prospective buyers.
Civil Code Section 1102.6
Specifies the Transfer Disclosure Statement form that sellers must complete, including questions about structural, mechanical, and other property conditions.
Civil Code Section 1102.6a
Requires additional disclosures including environmental hazards, Mello-Roos taxes, and supplemental property tax assessments.
Civil Code Section 1103
Requires Natural Hazard Disclosure Statement covering flood zones, fire hazard zones, earthquake fault zones, and other natural hazards.
TDS Disclosure Categories
| Category | Items Requiring Disclosure |
|---|---|
| Structural | Foundation, walls, roof, floors, ceilings - any defects, repairs, or alterations |
| Systems | Plumbing, electrical, HVAC, water heater - any problems or repairs |
| Water/Moisture | Water intrusion, flooding, drainage problems, moisture, mold |
| Soil/Grading | Settling, sliding, drainage issues, fill, geological hazards |
| Permits | Unpermitted additions, renovations, or repairs |
| Environmental | Lead paint, asbestos, mold, soil contamination, hazardous materials |
| Nuisances | Noise, odors, neighborhood problems affecting enjoyment |
| Legal | Lawsuits, HOA disputes, boundary disputes, zoning violations |
⚠ Natural Hazard Disclosures
In addition to the TDS, California requires a separate Natural Hazard Disclosure Statement (NHD) for properties in certain hazard zones.
🌊 Flood Hazard Zones
▼Civil Code 1103(c)(1): Disclosure required if property is in:
- Special Flood Hazard Area (Zone A or V on FEMA maps)
- Area of potential flooding per dam inundation maps
Sellers must disclose flood insurance requirements and potential flood risks.
🔥 Fire Hazard Zones
▼Civil Code 1103(c)(2): Disclosure required if property is in:
- Very High Fire Hazard Severity Zone (state responsibility areas)
- Wildland-Urban Interface fire area
Includes disclosure of brush clearance and vegetation management requirements.
🌏 Earthquake Fault Zones
▼Civil Code 1103(c)(3): Disclosure required if property is in:
- Earthquake Fault Zone (Alquist-Priolo zone)
- Seismic Hazard Zone (liquefaction or landslide potential)
May require additional geological reports and disclosures.
🌃 Other Environmental Hazards
▼Additional disclosures may be required for:
- Airport influence areas (noise, safety)
- Former military ordnance locations
- Commercial/industrial zoning within 1 mile
- Farming operations within 1 mile
- Mining operations proximity
💡 NHD Reports
Most sellers purchase a Natural Hazard Disclosure (NHD) report from a third-party company. These reports research public records and maps to determine which hazard zones apply to the property. Failure to provide an accurate NHD can result in liability.
🏗 Common Non-Disclosure Violations
These are the most common disclosure violations that lead to buyer claims:
🏗 Foundation Problems
Failing to disclose known foundation cracks, settling, prior repairs, or structural engineer reports.
💧 Water Damage History
Concealing prior flooding, roof leaks, water intrusion, or mold remediation.
📜 Unpermitted Work
Failing to disclose room additions, garage conversions, or renovations done without permits.
🐛 Pest Damage
Not disclosing termite damage, infestations, or prior pest treatments and repairs.
Other Common Violations
- Roof problems - Age, leaks, repairs, remaining lifespan
- Plumbing issues - Sewer line problems, polybutylene pipes, leaks
- Electrical defects - Aluminum wiring, panel issues, code violations
- HVAC problems - Age, repairs, operational issues
- Neighbor disputes - Boundary issues, nuisance complaints, HOA disputes
- Noise problems - Traffic, airport, commercial, neighbor noise
- Deaths on property - Within 3 years, if asked (Civil Code 1710.2)
- Pending litigation - HOA lawsuits, neighbor disputes, construction defects
- Environmental contamination - Soil contamination, underground tanks, nearby hazards
⚠ Active Concealment is Fraud
If a seller actively conceals defects (painting over water stains, covering cracks, etc.), this may constitute fraud, which has enhanced remedies including potential punitive damages and a longer statute of limitations.
💰 Remedies for Disclosure Violations
Buyers who discover undisclosed defects have several potential remedies under California law:
Available Remedies
| Remedy | Description |
|---|---|
| Damages | Cost of repairs, diminished value, consequential damages (temporary housing, etc.) |
| Rescission | Undo the sale - return property to seller, recover purchase price |
| Fraud Damages | If intentional concealment, may recover additional damages including punitive damages |
| Attorney Fees | If purchase contract has attorney fee clause (most CAR forms do) |
Rescission Requirements
To rescind (undo) the sale, you generally must:
- Act promptly upon discovering the undisclosed defects
- Offer to restore the property to the seller in substantially similar condition
- Show material misrepresentation that would have affected your purchase decision
- Show reliance on the seller's representations (or silence)
💰 Damages Calculation
You can typically recover the greater of:
- Out-of-pocket damages: Cost to repair the undisclosed defects
- Benefit of the bargain: Difference between price paid and actual value with defects known
Plus consequential damages like temporary housing, storage, expert fees, etc.
⏰ Statute of Limitations
3 years from when you discovered or reasonably should have discovered the undisclosed defect (Code of Civil Procedure 338(d)). For fraud claims, 3 years from discovery. Do not delay in taking action once you discover problems.
🖩 Disclosure Violation Damages Calculator
Use this interactive calculator to estimate potential damages in your case. Enter your information below to get an estimate of recoverable damages.
📈 Estimated Damages Breakdown
✅ Evidence Checklist
Gather these documents to support your disclosure violation claim:
📄 Disclosure Documents
- ✓ Transfer Disclosure Statement (TDS)
- ✓ Seller Property Questionnaire (SPQ)
- ✓ Natural Hazard Disclosure (NHD)
- ✓ Agent Visual Inspection Disclosure (AVID)
📜 Transaction Documents
- ✓ Purchase agreement and addenda
- ✓ Closing documents (settlement statement)
- ✓ Pre-purchase inspection report
- ✓ MLS listing and photos from sale
🔍 Evidence of Defects
- ✓ Post-purchase inspection report
- ✓ Photos/videos of defects discovered
- ✓ Repair estimates from contractors
- ✓ Expert opinions on when defects originated
📈 Evidence Seller Knew
- ✓ Permit records from city (prior repairs)
- ✓ Insurance claims on property
- ✓ Neighbor statements about issues
- ✓ Evidence of cover-ups (fresh paint, patching)
📝 Sample Demand Letter
Use this template for your TDS violation demand letter. Send via certified mail, return receipt requested.
[DATE]
[SELLER NAME]
[SELLER ADDRESS]
Re: Demand for Compensation - Transfer Disclosure Violations
Property: [PROPERTY ADDRESS]
Dear [SELLER NAME]:
I am writing regarding the property located at [PROPERTY ADDRESS], which I purchased from you on [CLOSING DATE]. Since taking possession, I have discovered serious defects that you failed to disclose in violation of California Civil Code sections 1102-1102.17 and your common law duty to disclose material facts.
On the Transfer Disclosure Statement you provided, you answered "No" or failed to disclose the following material facts that you knew or should have known:
1. [Describe Defect - e.g., "Water Intrusion and Mold"]
Your TDS indicated no knowledge of water intrusion, flooding, or moisture problems. However, I have discovered [extensive water staining on the ceiling of the master bedroom and living room, mold growth behind the drywall, and evidence of prior water damage repairs]. Evidence indicates you knew of this condition because [the ceiling was recently painted over visible water stains, the mold remediation company found evidence of prior treatment, neighbor confirmed you complained about roof leaks].
2. [Describe Additional Defect]
[Continue describing each undisclosed defect with specific facts about what was not disclosed and evidence of seller's knowledge]
Under California Civil Code section 1102 et seq., sellers of residential real property are required to provide buyers with a Transfer Disclosure Statement disclosing all known material facts about the property's condition. Your failure to disclose the above defects constitutes:
1. Violation of Civil Code 1102: Failure to complete the TDS accurately and in good faith
2. Fraud by concealment: Intentionally failing to disclose material facts you knew would affect the purchase decision
3. Negligent misrepresentation: Providing false information without reasonable grounds for believing it true
California courts have consistently held that sellers have a duty to disclose known material defects. See Lingsch v. Savage (1963) 213 Cal.App.2d 729; Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534.
As a result of your disclosure violations, I have suffered the following damages:
- Cost of repairs: $[AMOUNT]
- Expert inspection fees: $[AMOUNT]
- Temporary housing during repairs: $[AMOUNT]
- [Other damages]: $[AMOUNT]
TOTAL DAMAGES: $[TOTAL]
I hereby demand payment of $[TOTAL] within [30 DAYS] of the date of this letter. If I do not receive full payment by this deadline, I will pursue all available legal remedies, including filing a lawsuit seeking damages, attorney fees as provided in our purchase agreement, and potentially rescission of the entire transaction.
Please also be advised that I reserve the right to file a complaint with the California Department of Real Estate if your real estate agent was complicit in these disclosure failures.
- Copy of Transfer Disclosure Statement showing your false representations
- Inspection report documenting the undisclosed defects
- Repair estimates
- Photographs of the defects
- [Other supporting documentation]
Please direct your response and any settlement payment to:
[YOUR NAME]
[YOUR ADDRESS]
[YOUR PHONE]
[YOUR EMAIL]
Sincerely,
____________________________
[YOUR NAME]
Need Legal Help?
TDS violation cases require proving what the seller knew. Get a 30-minute strategy call with a real estate attorney.
Book Consultation - $125California Resources
- CA Dept. of Real Estate: dre.ca.gov - File complaints against agents/brokers
- DRE Public Inquiry Line: 1-877-373-4542
- California Civil Code 1102: leginfo.legislature.ca.gov
- State Bar Lawyer Referral: calbar.ca.gov
- Local Building Department: Check permit history on property