If you’re ready to get serious about selling your home, start thinking about your house’s history in earnest. California law requires sellers to complete a Transfer Disclosure Statement to notate any issues their home has, to protect both buyers and sellers. Let’s take a look at why it’s essential to complete a Transfer Disclosure Statement before selling your home.

Legal documentation The Importance of Completing a Transfer Disclosure Statement Before Selling Your Home

If you’re not familiar with the details of a Transfer Disclosure Statement (TDS), the simplest way to explain it is as a legal document divulging any problems with your home. So, when you sit down to draft your TDS — legally, it must be in your handwriting — you’ll consider any issues that could possibly decrease your home’s value or pose a health or safety risk for buyers.

The TDS is often tricky for sellers because it’s easy to gloss over items you live with everyday as not being significant. However, if you sell your home and those items become substantial issues, you can find yourself embroiled in a lawsuit. For this reason, sellers complete a TDS and present it to buyers for review. 

What you must disclose

The details of a TDS are extensive, which is why you should complete the paperwork before listing your home. Not only does this give you time to take a walk through your home and look at it with an objective eye, but completing the TDS provides the time to focus on your pending move.

You are legally required to disclose any deaths in the home that occurred in the previous three years, even if they occurred naturally. Outside of the three-year mark, you do not have to disclose. The exception to this disclaimer is any AIDS-related death, as revealing such information is subject to discrimination. It is, however, proper form to communicate any death that occurred in the home, in the off-chance that a buyer does their research, and discovers the information on their own.

The Importance of Completing a Transfer Disclosure Statement Before Selling Your HomeIf drugs were grown, processed, or manufactured on the property, you must disclose this information in the TDS. Specifically, in the case of methamphetamine production, as the chemicals involved are hazardous and known to permeate a home’s structure.

If your street becomes a parking lot at rush hour or is a major route in the area, you need to notate this to make buyers aware. Any other neighborhood disturbances should be disclosed as well, including being in the vicinity of an airport or a heavily trafficked flight route.

Finally, you need to disclose any issues with flooding, grading, or drainage on the property, in addition to any co-owned spaces and features, such as a shared driveaway or pool area. Consider all of the information you want to know when you enter into a contract to purchase a home and include it in your TDS. 

What does the TDS ask of sellers?

It’s helpful to see a line-by-line breakdown of the Transfer Disclosure Statement, to get a feel for what is expected of you as a seller. The TDS contains three sections: Property Characteristics, Malfunctions & Defects, and Special Questions.

In the Property Characteristics section, you will disclose whether or not you reside in the property your selling, in addition to all non-structural elements included with the property. Things such as appliances, a hot tub, or sprinkler systems are notated here, as well as whether or not the particular item is in working order. This section makes it clear that the document does not function as a warranty for the appliances included in the home.

The Malfunctions and Defects portion of paperwork is pretty straightforward. This section is where you’ll list and describe any structural issues on your property. If you have any plumbing or electrical problems, you need to disclose them in this section, in addition to defects in your foundation, roof, walkways, and anywhere else in and around your home. 

Finally, you’ll complete a section of questions meant to take care of any overlooked items. This portion is called Special Questions and will ask a range of questions, including any significant additions you’ve completed or if there are any judgments on the property.

You need to be thorough when completing the TDS paperwork to avoid any possible legal repercussions after the sale. If you have any questions as you go through completing the disclosure, contact a real estate attorney. Again, when in doubt, disclose.