California mandates more seller disclosures than any other state. The framework has four levels: (1) federal requirements, (2) state statutes, (3) local ordinances, and (4) fiduciary duties. A California licensee who understands all four levels can guide clients through the disclosure process confidently.
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The TDS is mandatory for the sale of 1-4 residential units. It cannot be waived by the parties. Exceptions are narrow: foreclosure sales by institutional lenders, probate/guardianship sales, transfers between spouses, and transfers to/from government entities.
Three sections: 1. Seller's own disclosure of known conditions (roof, foundation, water heater, plumbing, electrical, HOA, permits, nuisances, etc.) 2. Listing agent's AVID (Agent Visual Inspection Disclosure) — results of the agent's reasonably competent visual walkthrough 3. Buyer's agent AVID — same independent inspection by buyer's agent
Delivery: As soon as practicable before transfer. Buyer has 3 days (personal delivery) / 5 days (mailed) to rescind. Amended TDS upon discovery of new defects restarts the rescission period.
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Discloses whether the property is in any of six state-designated hazard zones: 1. Special Flood Hazard Area (FEMA) 2. Area of Potential Flooding (dam inundation) 3. Very High Fire Hazard Severity Zone 4. State Responsibility Area (wildland fire) 5. Earthquake Fault Zone (Alquist-Priolo) 6. Seismic Hazard Zone (liquefaction/landslide)
Typically prepared by a third-party NHD disclosure company. Buyer has same 3/5 day rescission right.
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Required for all homes built before 1978:
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Properties located in a Community Facilities District (CFD) are subject to special Mello-Roos tax assessments (in addition to the standard 1% property tax under Prop 13). Sellers must disclose any Mello-Roos obligations. These special taxes can add hundreds to thousands of dollars to annual carrying costs and must be disclosed before the buyer is bound.
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A seller must disclose a death on the property within the past 3 years if a buyer asks. The seller does NOT need to proactively disclose deaths more than 3 years old. AIDS-related deaths are never required to be disclosed, regardless of timing, under California law.
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California law requires sellers to:
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Sellers must certify that the water heater is properly braced, strapped, or anchored to prevent toppling in an earthquake. This is a California-specific requirement reflecting the state's seismic risk.
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For properties in a Common Interest Development (CID) — planned developments, condominiums, cooperatives — the seller must provide:
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For sales over $300,000, the seller must certify they are NOT a foreign national. If the seller is a foreign person, the buyer must withhold 15% of the gross sale price and remit it to the IRS under the Foreign Investment in Real Property Tax Act (FIRPTA). California also has a separate state withholding requirement (3 1/3% of sale price) for non-California-resident sellers.
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Quiz Questions:
Q1. A buyer purchases a 1962 home in Pasadena. The seller says they have never used lead paint. Is the federal lead-based paint disclosure required?
A) No — the seller has no knowledge of lead, so there is nothing to disclose B) Yes — for all homes built before 1978, the disclosure package and EPA pamphlet are required regardless of whether lead is known to be present C) No — the requirement only applies to homes built before 1950 D) Yes — but only if the buyer is a family with children under 6
Answer: B — Federal law requires the lead-based paint disclosure package for ALL pre-1978 homes regardless of the seller's knowledge. The purpose is to inform buyers of the potential risk and give them the opportunity to test.
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Q2. A seller's previous tenant died of a heart attack in the home 2 years ago. The buyer asks, "Has anyone died in this home in the last 3 years?" Under Civil Code §1710.2, must the seller disclose?
A) No — deaths of tenants are exempt from disclosure B) Yes — the death occurred within the past 3 years and the buyer directly asked; disclosure is required C) No — deaths from natural causes are exempt D) Yes — any death ever must be disclosed when directly asked
Answer: B — Civil Code §1710.2 requires disclosure of a death on the property within the past 3 years when the buyer inquires. Natural causes are not exempt (only AIDS-related deaths carry a permanent exemption). A tenant's death counts as a death "on the property."
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Q3. A buyer is purchasing a new construction condo in a San Jose development. The property has a Mello-Roos tax of $3,600/year. What must the seller disclose?
A) Nothing — Mello-Roos is visible on the county property tax bill and is publicly known B) The seller must disclose the Mello-Roos obligation; the buyer must sign an acknowledgment having received the CFD notice C) Only if the total annual tax burden exceeds $10,000 D) Mello-Roos disclosure is only required in resale transactions, not new construction
Answer: B — Mello-Roos special taxes must be specifically disclosed to buyers because they are in addition to the standard Prop 13 property tax and can significantly affect carrying costs. The developer/seller must deliver the CFD (Community Facilities District) notice, and the buyer must sign it.
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Q4. A foreign national sells her Los Angeles home for $1,500,000. FIRPTA requires:
A) The buyer to withhold 15% of the gross sale price ($225,000) and remit to the IRS unless an exemption applies B) The seller to pay 15% directly to the IRS before close of escrow C) No withholding — FIRPTA only applies to commercial properties D) Withholding of 10% — the 15% rate only applies after 2026
Answer: A — FIRPTA places the withholding obligation on the buyer. The buyer must withhold 15% of the gross sale price ($225,000) from proceeds and remit to the IRS unless a withholding certificate or exemption applies. Failure to withhold makes the buyer potentially liable for the tax. California has a separate 3 1/3% state withholding requirement.
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Q5. During a walkthrough, the listing agent notices brown water stains on the master bedroom ceiling and a visible crack running along the exterior foundation. The seller has not mentioned these issues. The listing agent's obligation is:
A) Wait for the seller to disclose voluntarily — it is the seller's responsibility B) Ask the seller about the issues privately and only disclose if the seller confirms knowledge C) Complete the AVID section of the TDS disclosing the observed water stains and foundation crack as visually observable conditions D) Disclose to the buyer's agent verbally but not in writing
Answer: C — The listing agent has an independent duty under Civil Code §2079 to conduct a reasonably competent visual inspection and disclose observable conditions. Water stains and visible foundation cracks are observable and must be disclosed in the agent's AVID section. The duty is independent of whether the seller has disclosed.