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The Property Disclosure Statement Explained

This is part 3 of a series of 6 articles that guide homeowners through the home selling process.These articles provide insight and suggestions to help homeowners sell their homes.

 Step 1: You’re Ready To Sell Your Home
Step 2: How To Price Your Home To Sell
Step 4: What To Do With Your First Offer
Step 5: How And When To Accept An Offer
Step 6: What To Expect When You’re Closing

As the owner of a California home for sale, your experience in the home gives you detailed knowledge about the past and present condition. This knowledge is essential for your buyer to know before purchasing your home. California state law requires you to complete the Real Estate Transfer Disclosure Statement and give it to the buyer before the transfer of title.

In this form, you must tell the buyer of all existing and potential problems including flooding dangers, lead paint, remodels without city permits, faulty pipes, leaky windows, deaths on the property, pest problems and neighborhood nuisances like  barking dogs or loud neighbors. Your First Team agent will help you figure out exactly what you must include.


A quick history: Before the mid-1960s, there was a “caveat emptor”, or buyer beware, policy in real estate. Then in the 60s, consumer-protective norms expanded to include real estate buyers. Brokers and agents started to be held responsible for a seller’s lack of disclosure to the buyer. This increase of legal responsibility encouraged these professional groups to support mandating sellers disclose all known and/or major problems with the home and neighborhood to the buyer prior to purchase. Now, the Property Condition Disclosure Act requires seller’s to give the buyer full disclosure to the best of their knowledge of the property.


Don’t be fooled into thinking that this disclosure only protects the buyer’s investment. It also protects you. Most issues, problems, or history you are required to disclose are based on your knowledge only, but there are a few details you must check on even if you’ve never seen signs of them in your home. In California, for example, a seller must tell a potential buyer if the home is on a fault line or in a seismic hazard zone. Talk to your agent and read California’s disclosure form to see exactly what is required of you.

If you fail to disclose an issue that you should have noticed, experienced, or researched, the buyer has the legal backing to take you to court. This is a lengthy and expensive process that could result in you having to pay up to 3 times as much as the cost of the damages incurred by the buyer.

Aside from legal repercussions, it is courteous to tell your potential buyer of all issues they will be inheriting. It goes a long way in establishing trust and smoothing negotiations.

If you want to be as efficient as possible, we recommend you fill out the form before you list your home on the market. As mentioned above, the Property Condition Disclosure statement must be given to the buyer before the transfer of title; the sale can’t close until this is done. The buyer has the legal right to back out of the deal if there is an issue on the statement they refuse to shoulder. It’s better for you and the buyer that there are no such surprises so late in the game.

Unlike the home inspections during the closing process, the Property Condition Disclosure statement cannot be waived even if the buyer insists. By law, you must give the statement to the buyer or their agent. If you are unsure whether something in the home is an issue or not, disclose it. It’s better to err on the side of too upfront than be accused of covering up problems. By honestly and completely filling out the form you absolve yourself of liability of any future problems.

Failure to disclose issues due to a careless oversight or an attempt to hide facts can land you in court up to 10 years after the sale. Some states require you to do extra research to uncover certain important issues. Even if this isn’t your first time selling a home in California, laws and requirements change regularly. Have your First Team agent help you navigate the Property Condition Disclosure form and don’t be afraid to ask them to clarify any points you don’t fully understand.