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Disclose, Disclose, Disclose … And Other Suggestions That A Seller Should Follow In Completing The TDS and SSC/SPQ

By David Hamerslough

February 13th, 2017

Real estate nondisclosure cases frequently include cross-examination of the seller and listing agent with respect to the following: the discussions that occurred between those parties regarding filling out the TDS and SSC/SPQ (“disclosure documents”), the amount of time the seller took to complete the disclosure documents, whether the seller had and/or relied on any historical documents, whether the seller understood the scope and breadth of the questions, whether the responses were complete, whether past problems were disclosed even if they had purportedly been rectified, whether the specific words used in response to a question were provided by the seller, the listing agent, or someone else, what prior experience the listing agent and seller had with regard to disclosures, and many other questions and/or issues.

Sellers have a duty to disclose all material conditions, defects, and/or issues known to them that might impact the value or desirability of the property. Failure to do so may lead to liability for damages. The following are some suggestions that a seller might follow when filling out the disclosure documents:

Preparing to complete the disclosure documents

  • Read and review all of the questions to make sure you understand the scope and nature of the information that is being requested.
  • Some questions, like 1-16 in Section II(C) of the TDS, refer to multiple conditions/issues and may be very broad. Similarly, the features and characteristics that are to be identified in Section II(A) of the TDS may exist in part but not all of the property (e.g., sprinklers that are in the front yard but not the back yard, water-conserving plumbing fixtures in some rooms but not others, etc.)
  • Research your records to locate any prior disclosures, reports, repair estimates, invoices (of any age), photographs, or other information that is responsive to any of the questions or otherwise relates to the property.
  • Put all of this documentation/information in chronological order and use it to assist you in answering the questions.
  • Save copies of whatever documents you use or rely on when filling out the disclosures
  • Walk around the inside and outside of the property with your disclosure documents in hand in order to remember issues, defects, repairs, leaks, or other conditions or damage.
  • It will probably take more time to complete the disclosures than you realize, so allow plenty of time.

Completing the responses

  • Do not leave any questions blank; explain any “yes” answers thoroughly and completely in the blank lines or in an addendum attached to the disclosure documents.
  • Your answers should provide facts responsive to each question; try and avoid opinions that suggest or indicate that a condition/issue is not significant, important, severe, etc. The use of words like “minor,” “insignificant,” “small,” “minimal,” etc., may reflect what you believe, but they may constitute an opinion that you are not qualified to provide or may downplay or diminish the significance of conditions/issues. This is a decision and a conclusion that should be reached by the buyer. Common examples of this relate to descriptions of cracks in the interior and exterior, leaks, water intrusion, etc.
  • What you have learned to live with or accept in terms of noise, odors, the functionality of an appliance or other system or component, etc. may not be something a buyer would expect or consider acceptable; it is always better to disclose such issues and let the buyer decide whether they are willing to accept and live with them.
  • A good practice is to not let your subjective opinions, beliefs, or tolerance of a condition cause you to downplay or fail to disclose the existence of some historical problem or idiosyncrasy with some component of your home.
  • Disclose any past defect or condition/issue with the property even if you believe it has been repaired and has not recurred. If the condition/issue has recurred, it is a good practice to identify when and how it recurred, why (without speculating) it recurred, if it has been repaired, who did the repair work, what was done, what work was done with or without permits, how much was spent on the repair, and whether the condition/issue has continued to exist after repairs were made. Attach any documentation supporting the foregoing.
  • If the source of your knowledge and information is someone else or a report or other document, attribute your response to that source and provide a copy of the document. Make sure to add any factual information that you also have on this subject.
  • If there is conflicting information or reports, disclose and identify all such conflicting information and reports.

Specific disclosure issues

  • Section II(A) of the TDS asks whether any of the items listed in this section are in “operating condition” but provides no definition of that term. Compare how any of the items actually work as opposed to how they would work if they were new. Section II(B) asks whether there are any “significant defects/malfunctions” in certain areas of the property, again giving no definition. Again, don’t let your subjective opinions, beliefs, or tolerance of a condition/issue cause you to downplay or fail to disclose such a condition/issue.
  • Make sure to respond to all conditions/issues listed in each question. If your answer applies to one or some of the conditions/issues, make sure you identify which ones you are responding to. For example, question 8 asks whether the seller is aware of “any flooding, drainage or grading problems.” If your answer is “yes,” then it is better to provide a thorough and complete explanation in the space below or on an attached addendum regarding which specific conditions/issues that “yes” applies to.
  • Repairs or additions that were made without building permits and uses of the property that may be in conflict with zoning ordinances (e.g., garage conversions, additions that exceed the allowable square footage or encroach into setbacks, etc.) are often the basis for a nondisclosure case. Any work done without building permits or in violation of zoning ordinances should be disclosed. Don’t assume that permits were obtained just because a contractor was involved, and don’t assume that an addition or conversion does not violate zoning ordinances. If permits were pulled for only part of the work, then disclose what portion of the work was done without permits. If any of the work was done by unlicensed individuals or by the seller, specify what work was done by whom. If you are at all in doubt, don’t guess or speculate.
  • Think in terms of not only your property but also any issues that impact your property because of something associated with a neighbor’s property (e.g., shared fences, plot-line issues, encroachments, neighborhood issues, noise, nuisances, any historical issue with regard to a neighbor or a neighboring property even if you believe it has been resolved or is not really an issue, etc.).
  • Disclose any planned or current changes or construction in the neighborhood that are known to you, such as changes to roads or other construction that may affect traffic or views or cause noise or other issues.
  • Disclose any lawsuits, past or present, that affect or have affected the property, even if the lawsuit has been resolved, and identify the court and case name and the outcome, if you know it.

Final suggestions

  • If any disclosure that is made becomes inaccurate or changes over time, the seller should update and correct their disclosure documents in a timely fashion.
  • When in doubt, it is always best to disclose. There is an emotional component for most people when it comes to purchasing residential property. Many buyers will overlook a disclosed condition/issue because of their emotional attachment to the property, market conditions, or other factors. At worst, a disclosure will result in a request for repairs, which can be negotiated and will hinge in part on the motivations of the parties and market conditions.
  • If you need help regarding what to disclose and how to disclose it, it is best to consult with a qualified California real estate attorney.