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Understanding Non-Disclosure Laws in California

By: LS Carlson Law July 6th, 2023

Amidst the whirlwind of buying or selling a property, it is essential to take a moment to understand the basics of non-disclosure laws and how they relate to your rights as a buyer or obligations as a seller. This article explores the intricacies of non-disclosure laws in California, and how they play a vital role in ensuring a fair and transparent real estate purchase process.

The Importance of Non-disclosure Laws:
Non-disclosure laws protect buyers from unknowingly purchasing a property with hidden problems not divulged by the seller. Non-disclosure laws require sellers to disclose any known material defects or issues that could impact the value or desirability of a property. When sellers fail to disclose these material facts, it can lead to costly disputes and legal actions in the future.

California’s Non-disclosure Laws:
In California, the duty to disclose is codified in the California Civil Code Section 1102 which mandates a Real Estate Transfer Disclosure Statement (TDS). The TDS is a comprehensive disclosure statement that sellers must provide to potential buyers, covering the property’s condition, known defects, relevant environmental hazards, and other neighborhood nuisances.

Additionally, California law imposes a duty on sellers to disclose any known facts that materially affect the value or desirability of the property, even if not explicitly asked in the TDS. This duty extends to both physical and legal issues, such as disputes, lawsuits, pending permits, and sometimes even the house’s reputation. When in doubt, it is better to disclose a fact that someone else may consider material, even if it did not subjectively hinder your enjoyment of the property.

Finally, Civil Code Section 1102 mandates that disclosures be made in good faith, meaning that sellers must disclose information honestly and to the best of their ability.

Legal Remedies for Non-disclosure:
Buyers may have legal remedies available if a seller fails to disclose material facts about a property:

Rescission: In cases of significant non-disclosure, buyers may have the right to rescind the transaction and recover their purchase funds.

Damages: Buyers may be entitled to seek compensation for financial losses incurred due to undisclosed defects, repairs, or other related expenses.

Specific Performance: In certain situations, buyers can request a court order to enforce the seller’s completion of necessary repairs or remediation.

Past Cases and Precedents: Several past cases in California have shed light on the interpretation and application of non-disclosure laws:

Alexander v. McKnight, 7 Cal. App. 4th 973, 975 (1992) (holding that sellers must disclose a negative fact about the property when reasonably foreseeable that it would alter the property’s value).

Easton v. Strassburger, 152 Cal. App. 3d 90, 95 (1984) (holding that sellers have a duty to disclose material facts that could have been discovered with reasonable diligence).

Lingsch v. Savage, 213 Cal. App. 2d 729, 732 (1963) (holding that the seller in an “as-is” sale must still disclose any hidden defects).

Reed v. King, 145 Cal. App. 3d 261, 263 (1983) (holding that sellers have a duty to disclose murders that occurred on the property). “‘[T]ruth will come to light; murder cannot be hid long.’ (Shakespeare, Merchant of Venice, act II, scene II.).” Id.

If you find yourself in a situation where you suspect non-disclosure, or you have questions regarding your TDS, seek the guidance of an experienced real estate attorney.

At LS Carlson Law, our knowledgeable team is well-versed in real estate law and can provide the legal assistance you need. Contact us today for a consultation to discuss your specific situation and explore your legal options.

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