Sellers Beware: Disclosure Requirements Expanded

In March 2014 we provided warning that new seller disclosure requirements would become effective July 1, 2014.  These expanded disclosure obligations are now in effect.  Sellers of single family residential property must now disclose certain construction defect claims.  A new Transfer Disclosure Statement expanding the disclosure obligation of sellers of single family residences, defined as one to four units, requires sellers to disclose if they are aware of any of the following claims threatening to or impacting the property:

1.  claims for damages by the seller based on construction defects;

2.  claims for breach of warranty; or

3.  claims for breach of an enhanced protection agreement, including any lawsuits or claims for damages under Civil Code Sections 910 or 914 alleging a defect or a deficiency in property or common areas. 

If you are a seller of property in a mass-produced housing development, you are now obligated to disclose any known, threatened or impending claims by homeowners for defects affecting the community and potentially your home.

These changes relate to construction defect claims arising out of what is commonly referred to as SB800, which is codified at California Civil Code Section 895 through 945.5.