📋 What is Seller Nondisclosure?
Seller nondisclosure occurs when a home seller fails to reveal known material defects or problems with the property before the sale closes. Under California law, sellers have a legal duty to disclose all known material facts that could affect the property's value or desirability. When sellers hide defects, buyers can sue to recover the cost of repairs, diminished property value, and in some cases, rescind the entire transaction.
When to Use This Guide
Use this guide if you discovered any of the following after purchasing your California home:
🏗 Structural Defects
Foundation cracks, settling, roof damage, framing issues, or structural instability
💧 Water Damage/Mold
Hidden water intrusion, flooding history, mold infestations, or plumbing leaks
🐛 Pest Infestations
Termite damage, rodent infestations, or wood-destroying organisms
⚠ Material Facts
Deaths on property, neighborhood nuisances, pending litigation, or permit issues
👍 What You Can Recover in Nondisclosure Cases
- Cost of repairs - What it costs to fix the undisclosed defects
- Diminished value - Reduction in property value due to defects
- Rescission - Undo the entire sale in serious cases
- Consequential damages - Temporary housing, storage, related costs
- Attorney fees - If provided in purchase contract
Common Nondisclosure Issues
🏠 Foundation & Structural Problems
▼Foundation cracks, settling, shifting, or repairs that were made but not disclosed. Structural issues with load-bearing walls, roof framing, or earthquake damage. Sellers must disclose any known foundation problems, even if previously repaired.
💧 Water Intrusion & Mold
▼Leaky roofs, basement flooding, plumbing failures, or moisture problems that led to mold. California sellers must disclose any history of water damage or mold, even if remediated. Hidden water stains, patched drywall, or fresh paint covering damage are red flags.
🐛 Pest & Termite Damage
▼Active or past termite infestations, wood-destroying organisms, rodent infestations, or pest damage to structural components. Even if treated, past infestations and damage must be disclosed. Section 1 clearances and pest reports are typically required.
🏙 Neighborhood & Environmental Issues
▼Nuisance neighbors, noise issues, flooding zones, soil contamination, nearby environmental hazards, planned construction, or zoning changes. Material facts affecting desirability must be disclosed even if not physical defects.
📜 Permit & Legal Issues
▼Unpermitted additions, renovations done without proper permits, code violations, HOA disputes, boundary disputes, or pending litigation affecting the property. Buyers can be held responsible for bringing unpermitted work up to code.
⚠ Time Limits Apply
California has a 3-year statute of limitations from when you discovered or should have discovered the defect (Code of Civil Procedure 338(d)). For fraud claims, you have 3 years from discovery. Do not delay in taking action once you discover undisclosed defects.
⚖ Legal Basis
California has comprehensive seller disclosure requirements. These statutes and cases support your nondisclosure claim.
Key California Statutes
California Civil Code 1102-1102.17
Requires sellers of residential property (1-4 units) to complete a Transfer Disclosure Statement (TDS) disclosing all known material defects. Sellers must disclose conditions affecting the property's value or desirability, including defects in major systems, structural components, and environmental hazards.
California Civil Code 1102.6
Specifies the Transfer Disclosure Statement form and requires sellers to disclose items such as structural modifications, room additions, settling or soil problems, flooding, drainage issues, major systems conditions, and any other significant defects known to seller.
Easton v. Strassburger (1984) 152 Cal.App.3d 90
Landmark case establishing that real estate agents also have a duty to conduct a reasonably competent visual inspection and disclose material facts. Both sellers and their agents can be liable for nondisclosure.
Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534
Established that sellers must disclose neighborhood noise problems and other factors affecting property desirability, not just physical defects. Sellers knew of noisy neighbors and failed to disclose.
Lingsch v. Savage (1963) 213 Cal.App.2d 729
Foundational case holding that sellers have a duty to disclose known material facts that are not readily observable and that affect the value or desirability of property. Silence can constitute fraud.
What Constitutes a "Material Fact"
Under California law, a fact is "material" if a reasonable buyer would consider it important in deciding whether to purchase the property or how much to pay. This includes:
- Physical defects - Any defect that substantially impairs the use or value of the property
- Environmental hazards - Lead paint, asbestos, mold, contaminated soil
- Legal issues - Permit problems, zoning violations, boundary disputes
- Neighborhood conditions - Nuisances, noise, crime, planned development
- Death disclosure - Deaths within 3 years if asked (Civil Code 1710.2)
💡 The "As-Is" Clause Does Not Protect Fraud
Even if you purchased the property "as-is," sellers cannot hide behind this clause if they actively concealed defects or failed to disclose known material facts. An "as-is" clause only protects sellers from claims about defects they did not know about - it does not excuse intentional concealment or failure to complete required disclosure forms.
✅ Evidence Checklist
Gather these documents and evidence before sending your demand letter. Click to check off items as you collect them.
📄 Transaction Documents
- ✓ Purchase agreement and all addenda
- ✓ Transfer Disclosure Statement (TDS) from seller
- ✓ Seller Property Questionnaire (SPQ)
- ✓ Agent Visual Inspection Disclosure (AVID)
🔍 Inspection Reports
- ✓ Pre-purchase home inspection report
- ✓ Pest/termite inspection report (Section 1)
- ✓ Post-purchase inspection documenting defects
- ✓ Specialist reports (structural, mold, etc.)
📷 Defect Documentation
- ✓ Photos and videos of all defects discovered
- ✓ Repair estimates from licensed contractors
- ✓ Invoices for any repairs already completed
- ✓ Expert opinions on when defects likely originated
📈 Evidence of Seller Knowledge
- ✓ Prior repair receipts or permits (check city records)
- ✓ Seller's prior insurance claims on property
- ✓ Neighbor statements about known issues
- ✓ Evidence of fresh paint, patching, or cover-ups
🔒 Preserve All Evidence
Do not destroy or alter any evidence of the defects before properly documenting them. Take extensive photos and videos. Get professional inspections. Keep all receipts. This evidence proves both the defect and that the seller should have known about it.
💰 Calculate Your Damages
In seller nondisclosure cases, you can recover damages to make you whole. Here are the categories of recovery available under California law.
| Category | Description |
|---|---|
| Cost of Repairs | The reasonable cost to repair or remediate the undisclosed defects |
| Diminished Value | Difference between price paid and actual value with defects known |
| Consequential Damages | Temporary housing, storage, lost rental income during repairs |
| Rescission | Undo the sale entirely - return property, get purchase price back |
| Attorney Fees | If purchase contract has attorney fee provision (most CAR forms do) |
💰 Two Measures of Damages
California allows either: (1) Benefit of the bargain - the difference between what you paid and the property's actual value; or (2) Out-of-pocket - the cost to repair defects. You may choose whichever measure results in greater recovery.
📊 Sample Damages Calculation
Example: Undisclosed Water Damage & Mold
When Rescission May Be Available
Rescission (unwinding the entire sale) may be available when:
- Defects are so severe the property is substantially different from what was represented
- Repairs would cost a significant percentage of the purchase price
- The seller actively concealed or committed fraud
- You can tender return of the property in substantially similar condition
💡 Market Value Considerations
Even if you can repair defects, the property may have diminished value due to stigma (e.g., known mold history, foundation problems). An appraiser can help establish this "stigma damage" as part of your claim.
📝 Sample Language
Copy and customize these paragraphs for your demand letter.
🚀 Next Steps
What to do after sending your demand letter.
Expected Timeline
Days 1-5
Seller receives and reviews your demand letter
Days 5-20
Seller may consult attorney, investigate claims
Days 20-30
Response with payment, counteroffer, or denial
If They Don't Pay
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Consult a Real Estate Litigation Attorney
Many work on contingency for strong nondisclosure cases. If your purchase contract has an attorney fee provision, you may recover your legal costs.
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Consider Mediation
Many California purchase contracts require mediation before litigation. This can be faster and less expensive than a lawsuit.
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File a Lawsuit
Claims under $12,500 can go to Small Claims Court. Larger claims are filed in Superior Court. You can sue both the seller and their real estate agent if the agent failed inspection duties.
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File a DRE Complaint
If a real estate agent was involved, file a complaint with the California Department of Real Estate. This creates regulatory pressure and documents the misconduct.
Need Legal Help?
Nondisclosure cases require proving what the seller knew and when. Get a 30-minute strategy call with an attorney to evaluate your case and next steps.
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
- State Bar Lawyer Referral: calbar.ca.gov
- California Civil Code 1102: leginfo.legislature.ca.gov
- Local Building Department: Check permit history on property