New Transfer Disclosure Statement - Construction Defect Claims

Effective July 1, 2014, the Real Estate Transfer Disclosure Statement (TDS) has been revised to require disclosure of whether a seller is aware of certain construction defect claims under SB 800 (Cal. Civil Code §§ 895, et seq.) as specified. The TDS is generally a required disclosure for sales transactions involving one-to-four residential units (with certain exemptions).

To view a PDF copy of the TDS that will become effect on July 1, 2014, please click here: www.leginfo.ca.gov/pub/13-14/bill/sen/sb_0651-0700/sb_652_bill_20130930_chaptered.pdf.

Under the new law, the revised TDS will inquire, in question 16 of Section 11C, as to whether a seller is aware of any of the following claims threatening to or affecting the real property: 

(1) claims for damages by the seller based on construction defects (under Cal. Civil Code §§ 910 and 914); 

(2) claims for breach of warranty (under Cal. Civil Code § 900); or 

(3) claims for breach of an enhanced protection agreement (under Cal. Civil Code § 903), including any lawsuits or claims for damages under sections 910 or 914 alleging a defect or deficiency in the real property or common areas. 

If any of these claims threatening to or affecting the real property have occurred, the seller must provide further explanation in the TDS. While the TDS does not create a warranty between the buyer and the seller, the buyer can rely on the disclosures in determining whether to purchase the property and a lack of disclosure may create liability for the seller.

Esquire Real Estate can help you with any questions you may have regarding the new TDS.