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Buyer beware in real estate disclosure law

On Behalf of | Aug 16, 2021 | Real Estate Transactions |

Due diligence begins once a potential buyer puts an offer on a property. During this brief period, which is 17 days in California, the building undergoes a physical inspection during which its structural integrity, the condition of electrical and plumbing systems and the general condition of the interior and exterior of the property are evaluated.

There are additional concerns that may get overlooked when the owners do not fully disclose construction defects such as drainage problems, boundary issues and other concerns, which then become a headache later on for investors, agents and developers who are overseeing multiple properties. But this lack of disclosure also creates liability for the buyers, real estate brokers and agents involved in the transaction.

Real estate disclosure law in California

The seller is required under California law to provide the buyer with a transfer disclosure statement, or TDS, which must provide full disclosure of anything of note about the property. Some of these issues can include:

  • Faulty framing
  • Slanting or bowing of floors or walls
  • Faulty framing, door or window issues
  • Foundation cracks
  • Mold
  • Leaky roofs or windows
  • Drainage or plumbing issues
  • Known sex offenders who live in the neighborhood
  • Deaths on the property

By law, the seller can only be held liable if the buyer took a specific action or actions to inspect the property before purchasing the property. While these disclosures place a heavy burden on the seller to provide comprehensive information about defects on a property, the buyer also owes a duty to exercise reasonable care in gathering the facts that are known or can be known.

Disclosure requirements for realtors and brokers

Realtors must also report any known defects or hazards of the property. Because defects sometimes do not appear until after the sale, the buyer can still sue for compensation. Both the agent and the owner can also be held liable if defects are discovered that were not revealed from the inspection. When this happens, it is essential to have the assistance of knowledgeable and aggressive real estate litigation attorneys who will protect the best interests of their clients in all real estate matters.