September 16th, 2019 at 2:24 pm
A. Yes, use the Transfer Disclosure Statement (TDS).
B. Yes, use the Exempt Seller Disclosure (ESD).
C. No.
D. It depends.
Answer: Answer A is not the best answer. Under California law, all sellers of real property must disclose known material facts affecting the value or desirability of the property. However, using the TDS for that purpose is not a good idea. If a seller is TDS-exempt, providing the buyer with a completed TDS anyway could arguably be construed as the seller’s agreement to abide by TDS requirements. Yet, the TDS law provides a buyer with broad cancellation rights when new information arises. It is true that the RPA also provides cancellation rights for the buyer when new information arises (see paragraphs 10A(6) and (7)). However, the wording in the RPA is not as broad as the wording in the TDS law.
Answer B is the best answer. Whenever a seller is TDS-exempt, use C.A.R.’s Exempt Seller Disclosure (ESD) instead of the TDS and Seller Property Questionnaire (SPQ). If the seller is aware of any material facts affecting the property, the seller would check “Yes” for Question 4J of the ESD, and provide an explanation in the blank lines provided.
If a TDS-exempt seller wants guidance as to what “material facts” are, you can give the seller the TDS and SPQ to use as checklists to help jog the seller’s memory about details concerning the property. However, instruct the seller not to complete and return those forms to you, e.g. by clearly marking the TDS and SPQ with the words “Sample Only. Do Not Complete.”
Answers C and D are wrong.
-Thank you to Bob Kelly (La Mesa/El Cajon Office) for suggesting this week’s legal tip.
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