When you are getting a property ready to go up for sale, you may need to make some repairs and improvements. Your agent will emphasize any recent upgrades along with the property’s other selling qualities when it’s time to market your home. In addition to discussing a property’s positive features, California law requires sellers to tell potential buyers about any known problems a home may have had before closing. One question that often comes up for homeowners is how far they have to go when disclosing these details. In other words, as a seller, do I have to disclose everything about my home to the buyer?
Disclosure of Material Facts
Sellers and their agents are required to disclose all material facts concerning a home’s condition. A fact is generally considered material when its disclosure would potentially impact a buyer’s decision to purchase a property. In California, when a seller knows about a material defect with a property, the seller must identify the defect before closing. The flaw could be something such as past or present damage to the flooring, termite issues, or another serious property matter that could affect the home’s value and desirability.
A buyer cannot be held liable when they did not know about a defect. For instance, suppose you sell your property, and a year later, the buyer starts having severe foundation issues. Unless you knew about the problem and failed to disclose, there will not be grounds for liability.
The bottom line is that if you know the home has had or has a significant problem and fail to tell a potential buyer, you could be held legally responsible in the future.
Stigmatized Properties in California
When it comes to a property’s history and reputation, the obligation to disclose is somewhat less clear-cut. Stigmatized properties, or properties that are considered less desirable or marketable for emotional or psychological reasons, can sometimes factor into disclosures. For instance, if your home was the sight of a murder or infamous crime, it may be considered a stigmatized property. Properties that are reputed to be haunted are also sometimes considered stigmatized.
California law does not technically require sellers to disclose reported paranormal activity on a Real Estate Transfer Disclosure Statement (TDS). California Civil Code section 1710.2 does mandate, however, that a seller disclose if a person died on the property “or the manner of death where the death has occurred” if the death took place within three years of the sale.
- There have also been cases where a seller’s failure to disclose a property’s gruesome history constituted a non-disclosure of a material fact when the death occurred more than three years before the sale.
- One of the most famous cases of a stigmatized property in California, Reed v. King, involved a seller failing to disclose that the home was the site of multiple violent murders ten years before the sale. The court found that the home’s tragic history was material to its value and desirability and that the seller had a duty to disclose the fact to the buyer.
- Section 1710.2 also says that “[t]his section shall not be construed to immunize an owner or his or her agent from making an intentional misrepresentation in response to a direct inquiry from a transferee or a prospective transferee of real property, concerning deaths on the real property.” Meaning that if a buyer asks you directly about deaths or even reputed hauntings in your home, you will probably be obligated to disclose what you know about the property’s history.
- The law specifically provides that a seller does not have to disclose that someone who lived in a property had Human Immunodeficiency Virus (HIV) or died from Acquired Immune Deficiency Syndrome (AIDS)-related complications while living on the property.
Although California law requires sellers to disclose material facts and defects, there is somewhat of an exception when it comes to foreclosed properties. Foreclosure sellers often sell without having seen the subject properties and frequently must sell “AS IS.” The foreclosure seller will not necessarily have to complete the routine disclosures as an ordinary seller. However, the seller is still under a legal obligation to disclose any known material facts to a potential buyer.
Contact the Law Office of Raffy Boulgourjian
Attorney Raffy Boulgourjian is a California real estate attorney with over twenty years of experience representing clients in residential and commercial real estate matters. He has the knowledge and expertise to protect your real estate interests. Contact Mr. Boulgourjian today to schedule a free legal consultation to discuss your California real estate legal needs.