What happens if the seller fails to disclose a problem to the buyer in California real estate transactions?  In California, and here in San Diego Sellers and their agents are under substantial legal obligation to fully disclose all known issues, defects, problems, neighborhood issues, mold, noises, or other factors that would reduce your enjoyment of or the perceived value of the property being offered.  The California “Transfer Disclosure Statement” or TDS as well as the “Seller Property Questionnaire” are intended to provide all known defects or issues with a property that is offered for sale.

These must be provided to the buyer in a timely manner immediately following the execution of a contract on the property.  If the seller fails to disclose a problem to the buyer in California associated with known defects or issues that affect the use or value of the property you can hold them financially accountable, or force them to take the property back and return you to the legal and financial position you enjoyed prior to entering into the transaction.

The experienced commercial and residential real estate attorneys at the Watkins Firm can assist at many points during a real estate transaction.  We can help to negotiate the terms of your agreement, arrange closing dates and other critical terms to reduce your tax obligations and create the best terms for your interest, and protect you from potential risks down the road.  If you have purchased a property in or around San Diego or anywhere in California and are concerned about a defect or a seller’s failure to disclose, we will help you to asses the relevant damages and pursue the most timely and cost-effective route to resolve the issue or return the property to the seller and ensure that you are made whole.

Pro-Tip: “There’s two types of defects. There’s the obvious and there there’s the hidden patent and latent defects. You’re 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?

So in a typical real estate dispute where there’s an issue with defects or hidden defects, 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 a residential real estate transaction, there’s something called a transfer disclosure statement or “TDS.”  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 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, Hide it and pass it on.

And you just hope nobody finds out, or they just let it go. So where’s that fine line between ‘you knew about this’ versus, ‘maybe you really didn’t know about this, but we have a problem?’ Let’s talk about carpet and big old cracks in the concrete. We live on clay soil. This is desert and clay. So, that concrete cracks.  Clay is expansive, and your thickest most reinforced concrete is no match for expanding clay. It’s brutal.

Let’s talk about slope creep. They have a lot of slopes, a lot of not clay environments where you have just sand and dirt that the bluffs are always falling off – erosion. All those things can cause a crack in your slab that needs support, but it’s hidden by carpet and furniture and all kinds of things. And usually there’s been evidence of repair and somebody had to repair it and it’s covered up. So yeah, they have big trucks with concrete pumpers that go in there and try to reinforce an engineering and huge bills for a cracked slab. That’s a bad situation right there.

As attorneys with 40 years of experience, we can usually tell what’s covered up, what’s been attempted to be repaired before versus what’s an honest, ‘I had no idea.'” – Dan Watkins, Founding Partner

If you are in the midst of purchasing a property or if the seller fails to disclose a problem to the buyer in California 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.