California law is well developed surrounding issues of hidden defects and failure to disclose in San Diego real estate transactions. The seller is required by law to make full disclosure of all issues they are aware of, as well as those that are necessary to avoid “fraud, misconception or deceit.” These issues are noted on the Real Estate “Transfer Disclosure Statement” or TDS, and this document must be provided to the “buyer(s)” as soon as possible before the closing of the transaction.
The over-riding purpose of the law is for the seller of real estate in San Diego and across the State of California to provide “meaningful disclosures” about the condition of the property that is being sold. The problems with hidden defects and failure to disclose don’t have to relate simply to the structure itself, or to the physical land where it is located. The seller must disclose anything that would affect the “value or desirability” of the property as well.
Things such as odors in the air, loud noises from a neighbor’s workshop, and even the constant barking from a neighborhood dog are prudent to disclose. Some sellers attempt to provide minimal disclosures or consider these matters as a gray area in the law to help the property to sell and maximize profit. However, listing a property “as-is”, hiring a home inspector or providing a seller’s warranty does not fully protect the seller from all liability under the law, and it is important to discuss any concerns or questions you might have as a seller regarding failure to disclose and hidden defects prior to providing the TDS.
Pro-tip: “There’s two types of defects. There’s the obvious, and then there’s the hidden patent and latent defects. The seller is responsible for both, but the standard of care is different between the two. If it’s an obvious defect, you’re more likely going to be in trouble if you don’t disclose it. But if it’s so obvious, then the other side can’t say they didn’t know about it. And if it’s hidden, then how hidden is it and should you have known? And is it hidden to such an extent that the other side, the buyer, let’s say, couldn’t have known about it?
What is the level of awareness that a buyer needs to have? And then what’s the level of awareness a seller needs to have?
In residential real estate, there’s something called a Transfer Disclosure Statement or TDS, governed out of civil code section 1100, I believe. And that talks about what the actual legal requirement is for disclosure. And this form has grown from one page to six pages. And you have to be honest on that. So when I get a real estate defect case today, I’ll go right to that document because somewhere in there, if the seller’s a bad guy, they lied on the TDS. And that’s where you have a problem because it’s hard to sell a house with a big defect and you don’t want it, and you can’t afford the house anymore. So you get tempted to just kind of skimp on your disclosures, pass it on, and you just hope nobody, they just let it go. So where’s that fine line between you knew about this versus, okay, maybe you really didn’t know about this, but we have a problem.” – Dan Watkins, Founding Partner
If you have purchased commercial or residential real estate in San Diego and believe there were hidden defects or a failure to disclose on the part of the seller we invite you to review our podcast Episode 43 – Real Estate Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today. We will review all that has happened, and help to protect your interests and hold the seller(s) accountable.
