When you sell a piece of residential real estate in California, you will most likely need to fill out the Real Estate Transfer Disclosure Statement (TDS) and the Seller Property Questionnaire (SPQ). These documents serve as disclosures, giving you the opportunity to share what you know about your property with the buyer. Below we will explain the importance of, and how to fill out both of these disclosures.
The Real Estate Transfer Disclosure Statement
Section 1102 of the California Civil Code requires that a majority of residential seller complete a TDS for the buyer. It’s common for sellers to get nervous about sharing all of the nitty-gritty details of their home – “won’t it scare buyers away?” our clients often ask. The truth is, if a buyer is serious about buying your home, they will not walk away. Additionally, you are required by law to disclose known issues. Gerard Launay based in the California Law Office of Gerard D. Launay says “pretty much the rule is that if you have any notice or knowledge that you have a problem with your house, you have to disclose it.” Therefore, thoroughly and honestly filling out the TDS protects you from legal trouble down the road.
This is not to say that you have to know every issue that may have occurred with your property. Section 1102 of the CA Civil Code clearly states:
“Neither the seller nor any seller’s agent or buyer’s agent shall be liable for any error, inaccuracy, or omission of any information delivered pursuant to this article if the error, inaccuracy, or omission was not within the personal knowledge of the seller or that listing or buyer’s agent, was based on information timely provided by public agencies or by other persons providing information as specified in subdivision (c) that is required to be disclosed pursuant to this article, and ordinary care was exercised in obtaining and transmitting it.”
In other words, it is ok if you do not know the answer to a question on the TDS, you just need to say as much in the disclosure. Additionally, the “persons providing information as specified in subdivision (c)” portion of the quote above refers to “expert, dealing with matters within the scope of the professional’s license or expertise” such as a land surveyor, geologist, structural pest control operator. This means that if issues were found and reported in the course of, for example, a home inspection, land survey, or a pest inspection, the reports resulting from said inspections will satisfy the disclosure requirement for that issue.
The TDS clearly states that it is not a warranty of any kind and is not a substitute for a home inspection. However, if you are aware of any present or past problems with the house, you must disclose them or you could be held liable for non-disclosure in the future if the buyer takes an issue to court.
It is best to deliver this disclosure as soon as possible to buyers. Why? Because, regardless of what your contract states about sale-contingencies, buyers will be able to get out of a contract to buy your property in the three days following the delivery of the TDS.
Can My Realtor® Fill It Out For Me?
The resounding answer to this question is no. While a good real estate agent will want to help you with every aspect of your home sale, he or she legally cannot fill out this form for you. Additionally, she or he cannot provide legal advice in regards to how to fill out the form. Questions like “is this a material fact that needs to be disclosed” and “how should I word this” will require the help of a real estate attorney.
Filling Out the Transfer Disclosure Statement
The TDS is only three pages long, and the Seller is responsible for Sections I and II. Note that some property owners may be exempt from filling out the TDS, to find out if you are one, take a look at this recourse and consult with your Realtor.
I. COORDINATION WITH OTHER DISCLOSURE FORMS
In some situations, a contract will stipulate that certain inspections need to be completed before the deal closes. If those inspections were completed before giving the TDS to the buyer, you can check the first box in this section. If any other unusual inspections were done, you can check the second box and then list the inspections that were done.
II. SELLER’S INFORMATION
Subsection A of this Section II is primarily concerned with listing features and installments in and around the property. Be sure to only fill in boxes for items that you know for certain are in the property. For example, if you are not sure what the age of the roof is, do not estimate. Additionally, only check items that pertain to the home – if your home does not have a sump pump or a gazebo, you would not check those boxes.
Subsection B provides a list of property components, and you should disclose any known defects of any of the structures listed. If you check a box, you will need to explain why. If you do not have space, you can always type or write additional information on a blank piece of paper and include it with the disclosure.
At the very end of this section, the asterisked paragraph states that all homes built on or after January 1st of 1994 must be equipped with water-conserving plumbing fixtures (regardless if you are selling the property). This means, if your home was built after January 1st of 1994, you will need to install low flow toilets and shower heads if you have not already. There are numerous rebate programs for these fixtures in various local jurisdictions within Santa Cruz County. You can read more about this requirement here.
Subsection C lists a number of common problems that may occur with a house. Read each question carefully and, if you are aware of any issues listed, check the box and provide a description under the check boxes. If you’ve checked more than one box, you can enumerate your description. For example, if you disclose that there is flooding, drainage, or grading problems because rainwater tends to pool near the basement, you can write something along the lines of 8) rainwater tends to pool near basement door.
Subsection D states that the seller certifies the following:
- The house will have operable smoke detectors which are in compliance with applicable laws, installed in the house before the close of escrow.
- The water heater tanks will be braced, anchored, or strapped in place in accordance with applicable laws.
The Seller Property Questionnaire
When you sell a single family residential home you will most likely use the California Residential Purchase Agreement when working with a Realtor®. This contract requires you to fill out the Seller Property Questionnaire (SPQ) when you are required to fill out the Real Estate Transfer Disclosure Statement (TDS). For more residential sales, you will be required to fill out the TDS by law, though there are exceptions.
The SPQ protects you, the seller. By providing a more thorough disclosure either before or during a transaction than may have otherwise occurred, the seller reduces the possibility for misunderstandings with the buyer, and even worse, future claims or lawsuits by the buyer that you misrepresented the property, intentionally failed to disclose material facts or committed fraud.
Filling Out the Seller Property Questionnaire
The bulk of the information that you will be required to disclose will be in Section V of the SPQ, subsections A through M. The types of questions in each subsection are usually made clear by their descriptive names. When filling out the questions in Section V, keep in mind that the SPQ instructs you to answer the question, “ARE YOU (SELLER) AWARE OF…” for each subsection. This means, if you check “No” this means that you are not aware of a particular issue. It does not mean that the issue does not exist. If you think an issue may exist but are not sure, you can specify this in the explanation section underneath.
If you need additional room to describe any of your answers in Section V, you can check the box in Section VI and include an additional written or typed explanation of that answer. Be sure to include the subsection number(s), and question number(s) in your explanations.