Multiple Choice Question: A seller in a pending sales transaction has provided the buyer with the seller’s Transfer Disclosure Statement (TDS), as required by law. The listing agent, however, has not provided an Agent Visual Inspection Disclosure (AVID). Is the seller’s disclosure package complete? Pick the best answer:

A. It depends on whether the listing agent’s AVID will reveal any new disclosure items.
B. It depends on whether the seller gave the buyer the TDS before the buyer wrote the offer.
C. It depends on how the listing agent’s section of the TDS was completed.
D. All of the above. 

Answer: Answer A is wrong (so Answer D is wrong too). Contrary to popular belief, the AVID is not a legally-mandated form. Of course, our company requires our agents to do AVIDs, but that’s just our company’s requirement, not a legal requirement. What the law actually requires is for the listing agent to conduct a diligent and competent visual inspection for one-to-four residential-unit properties. But a few decades ago, C.A.R. drafted the AVID so that agents would have a way to document that they performed their visual inspection, and what their visual inspection revealed.

Answer B is wrong. It’s true that, generally speaking, if a seller gives the buyer the TDS before the buyer writes an offer, the buyer has no 3-or-5 day right to cancel under the TDS law (see Cal. Civ. Code section 1102.3). However, the RPA states that the TDS “is considered fully completed if Seller has completed” Sections I and II, and “the Seller’s Agent, if any, has completed and Signed the Seller’s Agent’s section (Section III), or, if applicable,” an AVID (see paragraph 11A(2) of the RPA).” So, regardless of when the seller provided the TDS, we need to know how the TDS was filled out in order to figure out whether the seller’s disclosure package is complete.

Answer C is the correct answer. Whether the seller’s disclosure package is complete depends on how the listing agent completed the listing agent’s section (Section III) of the TDS. The listing agent could have, for example, left Section III blank. In that case, the TDS is incomplete under paragraph 11A(2) of the RPA (see above discussion). Alternatively, the listing agent could have checked Box #1 for “See attached AVID,” even though we know the listing agent has not provided the AVID yet. In that case, the TDS without the AVID is not complete, and so the seller’s disclosure package is not complete.

On the flip side, the listing agent could have checked Box #2 indicating that “Agent notes no items for disclosure.” Or the listing agent could have checked Box #3 for “Agent notes the following items,” and the agent could have written out what the agent noted in the blank lines provided. If the listing agent completed Box #2 or #3 in the manner described, the TDS and seller’s disclosure package are complete, even though the listing agent has not provided an AVID yet.

Stay Tuned Next Week: If a listing agent does not provide an AVID along with the seller disclosure package, and the buyer removes all contingencies, will the buyer be able to cancel upon receiving the AVID later on? Tune in next week for the answer!

-Thank You to Jeni Bober (Brentwood Office) for suggesting this week’s legal tip!

Copyright© 2024 Shared Success Center, LLC (serving HomeServices of America companies). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of October 28, 2024. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.