What Are Home Sellers Required to Disclose—and What Can They Leave Out?

I'm based in California, where there are a number of rules. Here, sellers must complete a statutory transfer disclosure statement. We call it a TDS in the industry, and it covers the property's facts and condition. To answer your question briefly, the seller is obligated to disclose what they know. This includes known malfunctions in major systems.

For example, if the roof leaks, you have to disclose this, even if you're saying you're selling it "as-is." Does the AC work? Does the plumbing function? Do the electrical systems work? Are they all up to code? Was there any past water intrusion, such as flooding? Are there soil problems? Even if there's a neighbor who has loud parties till 3:00 in the morning, these are all things that need to be disclosed. Other requirements on the TDS form include natural hazard disclosure forms and lead-based paint forms for older homes. As a rule of thumb, I always say, "If you have to ask me, disclose it."

With those types of things, the best thing is to ask your real estate professional and make sure you have all the required forms filled out. California is the most litigious state in the nation, always has been, but I know other states follow our lead on disclosure from a legal standpoint. The most practical advice I can give anybody in any state is to urge sellers to err on the side of transparency. Sealment of known material issues can create serious liability later and is one of the most litigated problems.

What Doesn't Have to Be Disclosed

When it comes to deaths, under the law, you don't have to disclose if somebody passed on the property if they passed more than three years ago. Sellers are also not required to investigate as an inspector would. In other words, they're not required to specifically look for things prior to selling, just for the purposes of disclosure.

Non-material stigma is another thing you don't have to disclose. Unless something directly affects the values specifically required by law, you're not required to disclose. This would include the psychological impacts of ownership, such as "it's too close to a church," or "it's too close to a past crime." These things are often handled on a case-by-case basis with brokers and legal advice.