Key Takeaways
- The Transfer Disclosure Statement (TDS) is required for sales of 1-4 unit residential properties under California Civil Code Section 1102
- Sellers must disclose all known material facts about the property's physical condition, including defects and repairs
- The TDS must be delivered "as soon as practicable" before transfer of title
- Buyers who receive TDS after signing the purchase agreement have 3 days (in person) or 5 days (by mail) to rescind
- TDS is required even for "as-is" sales—the disclosure obligation cannot be waived
Transfer Disclosure Statement (TDS)
The Transfer Disclosure Statement (TDS) is California's primary disclosure document for residential real estate transactions. It is governed by California Civil Code Sections 1102-1102.14.
When TDS is Required
The TDS is required for the sale, exchange, or installment land contract of:
| Property Type | TDS Required? |
|---|---|
| Single-family homes | Yes |
| 2-4 unit residential | Yes |
| Condominiums | Yes |
| Mobile homes | Yes |
| Stock cooperatives | Yes |
| Commercial property | No |
| 5+ unit residential | No |
Key Point: "As-Is" Sales
Even in "as-is" sales, the TDS is still required. The seller cannot waive the disclosure obligation. "As-is" only means the seller won't make repairs—not that they can hide defects.
TDS Content Requirements
The TDS has three main sections:
Section I: Seller's Information
The seller discloses:
| Category | Items to Disclose |
|---|---|
| Structural | Foundation, roof, walls, floors, ceilings |
| Systems | Plumbing, electrical, heating, cooling, water heater |
| Appliances | Built-in appliances, smoke detectors, security systems |
| Exterior | Pool/spa, sprinklers, fencing, drainage |
| Common areas | Shared driveways, easements, HOA issues |
| Defects | Any known problems, previous repairs |
| Other | Deaths on property (3 years), lawsuits, environmental hazards |
Section II: Agent's Inspection
The listing agent must conduct a visual inspection of accessible areas and disclose:
- Any items that appear to be defective
- Areas that weren't inspected and why
- Obvious problems visible without specialized knowledge
Section III: Selling Agent's Inspection
The selling agent (buyer's agent) must also inspect and disclose similar information.
Important: Agent inspections are visual only. Agents are not required to inspect areas that are inaccessible, covered, or require specialized knowledge.
TDS Delivery Requirements
The TDS must be delivered to the buyer as soon as practicable before transfer of title.
Timing Rules
| Delivery Method | Buyer's Rescission Period |
|---|---|
| In person | 3 days |
| By mail | 5 days |
| By email (if agreed) | 3 days |
If the buyer receives the TDS after signing the purchase agreement, the rescission period begins upon receipt.
Amendments to TDS
If the seller discovers new information after providing the TDS, they must provide an amended TDS. The buyer then has a new rescission period.
TDS Exemptions
The following transfers are exempt from TDS requirements:
| Exemption | Reason |
|---|---|
| Foreclosure sales | REO, trustee's sale |
| Probate sales | Court-supervised estate sales |
| Bankruptcy sales | Bankruptcy court-supervised |
| Government transfers | Eminent domain, tax sales |
| Between co-owners | Divorce, dissolution of partnership |
| Transfer to/from trust | Same beneficial ownership |
| First sale of new construction | Builder provides other disclosures |
Note: Even exempt transfers may require other disclosures like the Natural Hazard Disclosure.
Agent's Duty of Visual Inspection
California Civil Code Section 2079.3 requires listing and selling agents to:
- Visually inspect all accessible areas
- Disclose findings on the Agent Visual Inspection Disclosure (AVID)
- Sign the TDS indicating completion of inspection
What Agents Must Inspect
| Must Inspect | Not Required |
|---|---|
| All rooms | Behind walls |
| Basement/attic (accessible) | Under flooring |
| Garage | Inside equipment |
| Exterior grounds | Underground systems |
| Visible mechanical systems | Anything requiring tools |
Agent Liability
Agents can be held liable for:
- Failing to conduct the required inspection
- Failing to disclose items discovered
- Not disclosing items that should have been discovered with reasonable diligence
How long does a buyer have to rescind a purchase agreement after receiving a late TDS delivered in person?
Is the Transfer Disclosure Statement required for "as-is" sales in California?