Real Estate Transfer Disclosure Statement (TDS)

Real Estate Transfer Disclosure Statement

By: California Association of Realtors Legal and Board Services Department



Question:
What is the Real Estate Transfer Disclosure Statement?

Answer:
A Real Estate Transfer Disclosure Statement ("TDS") is a form prescribed in Civil Code ss 1102.6. Sellers of residential property with 1-4 units have been required to furnish this completed form to prospective purchasers. Sellers and licensees may comply with this law by utilizing C.A.R. Form TDS-11.

The Real Estate Transfer Disclosure Statement describes the condition of a property and, in the case of a sale, must be given to a prospective buyer as soon as practicable and before transfer of title. In the case of a transfer by a real property sales contract (as defined in Civil Code Section 2985) by a lease coupled with an option to purchase, or by a ground lease coupled with improvements, the TDS is to be delivered before the execution of any of the foregoing.

The seller and any broker(s)/agent(s) involved are to participate in the disclosures. If more than one broker/agent is involved, the broker/agent obtaining the offer is to deliver the disclosures to the prospective buyer unless the seller instructs otherwise.

Delivery to the prospective buyer of a report or opinion prepared by a licensed engineer, land surveyor, geologist, structural pest control operator, contractor, or other expert (dealing with matters within the scope of the professional’s license or expertise) may limit the liability of the seller and the real estate broker(s)/agent(s) when making required disclosures. The overall intention is to provide meaningful disclosures about the condition of the property being sold or transferred. (Cal. Civ. § 1102.4)

Question:
What types of real estate transactions are covered by this disclosure law?

Answer:
These disclosure requirements apply to transfers by sale, exchange, installment land contract, lease with an option to purchase, option to purchase, or ground lease coupled with improvements, of real property (or a residential stock cooperative) improved with 1-4 dwelling units.


Question:
Are there any transactions involving one to four units property for which the seller is exempt from the necessity of providing a Real Estate Transfer Disclosure Statement?

Answer:
Yes. Certain types of transfers are specifically exempted in Civil Code ss 1102.1. They are as follows:

Transfers requiring a public report pursuant to ss 11018.1 of the Business and Professions Code and transfers pursuant to ss 11010.8 of the Business and Professions Code where no public report is required.

Transfers pursuant to court order (such as probate sales, sales by a bankruptcy trustee, etc.).

Transfers by foreclosure (including a deed in lieu of foreclosure and a transfer by beneficiary who has acquired the property by foreclosure or deed in lieu of foreclosure).

Transfers by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust.

Transfers from one co-owner to one or more other co-owners.

Transfer made to a spouse or to a child, grandchild, parent, grandparent, or other direct ancestor or descendant.

Transfers between spouses in connection with a dissolution of marriage or similar proceeding.

Transfers by the State Controller pursuant to the Unclaimed Property Law.

Transfers or exchanges to or from any government entity.

It should be noted, however, that a real estate licensee still has a duty to conduct a reasonably competent and diligent visual inspection of accessible areas in almost all of the above situations. In other words, although the seller is exempted from having to provide a disclosure statement in certain situations, a licensee must conduct this inspection, and disclose the results of the inspection, in almost all residential transactions involving one to four units.


Question:
Must a Transfer Disclosure Statement be provided to a purchaser of a new residential property that is not part of a subdivision, such as a new home being built on a lot?

Answer:
Yes. The disclosure statement must be provided to purchasers of these types of new homes.



Question:
Does the Real Estate Transfer Disclosure Statement requirement apply to "For Sale by Owner" transactions?

Answer:
Yes. The law applies even if there is no real estate licensee involved in the transaction.



Question:
Who must fill out this Real Estate Transfer Disclosure Statement?

Answer:
The seller must fill out sections I and II of the form. If any real estate licensees are involved in the transaction, the listing and selling agents usually fill out sections III and IV, respectively, based on the results of the careful visual inspections they have conducted.


Question:
On 1-4 unit transactions where the seller is exempt from providing the Transfer Disclosure Statements, but where the real estate licensees involved are required to conduct an inspection, should the licensees provide the buyer with a completed TDS form?

Answer:
No. The real estate licensees should never fill out the seller's portion of the Transfer Disclosure Statement. If they wish to, any agent involved in the transaction may disclose the results of his/her inspection on page 2 of the TDS form, or he/she can make the disclosure on a separate piece of paper.


Question:
Are the real estate agents responsible for checking and commenting on the accuracy of the seller's portion of the TDS form?

Answer:
No. The agents do their own inspection and disclose their findings, on the TDS or elsewhere, whether or not their findings agree with the seller's portion.


Question:
What about landlords or relocation companies who have never lived in, or even seen the inside of their residential property (1-4 units)? Are they exempted from having to fill out the disclosure statement?

Answer:
No. A seller in this situation must fill out the disclosure statement to the best of his/her ability.


Question:
Who is responsible for delivering the disclosure statement to the buyer?

Answer:
If two or more real estate licensees are acting as agents in the transaction, the selling agent must deliver the statement to the buyer, unless the seller has given other written instructions for delivery. If only one licensee is involved, that licensee must deliver the statement to the buyer. If no real estate licensees are involved in the transaction, the seller is responsible.



Question:
When does the disclosure statement have to be delivered to the buyer?

Answer:
If possible, it would be preferable to provide the completed disclosure statement to the buyer prior to his/her signing the offer to purchase. If the buyer receives the disclosure statement after execution of his/her offer to purchase, the buyer will have a three or five day period to cancel the transaction.


Question:
When should the prospective buyer of a new home, that is not exempt from the TDS requirement, receive the completed form?

Answer:
The buyer should get the TDS before he/she enters into the contract to purchase the home, even if it has not yet been built. In other words, no special rule applies.



Question:
Does a buyer have a right to cancel the transaction when the Transfer Disclosure Statement is furnished after the buyer has signed the offer to purchase?

Answer:
Yes. "If any disclosure, or any material amendment of any disclosure . . . is delivered after the execution of an offer to purchase, the transferee (buyer) shall have three days after delivery in person or five days after delivery by deposit in the mail, to terminate his or her offer by delivery of a written notice of termination to the transferor (seller) or the transferor's (seller's) agent." (Civil Code ss 1102.2.)



Question:
What if after the disclosure statement is furnished to the buyer but before the close of escrow, an error or omission in the disclosure form is discovered?

Answer:
The Real Estate Transfer Disclosure Statement may be amended, at any time, in writing, by the seller or his/her agent. However, if any material amendment to the disclosure statement is delivered to the buyer after he/she is already obligated under the contract, he/she has three days, if delivered in person, or five days, if deposited in the mail, to rescind the contract. In other words, if the statement is materially amended at any time after the execution of the contract, the buyer has a right to back out of the transaction.



Question:
Is it mandatory that a Real Estate Transfer Disclosure Statement be provided to a buyer in applicable real estate transactions, or can a buyer waive his/her right to receive the form?

Answer:
The law states that the seller must provide the disclosure statement to the buyer. This requirement can not be waived.



Question:
What happens if the seller refuses to fill out a Real Estate Transfer Disclosure Statement?

Answer:
The statute provides that if the seller willfully or negligently violates any of its provisions, the seller will be liable to the buyer for any actual damages which result from such a violation. If the licensee responsible for delivering the disclosure statement cannot obtain it, that licensee must advise the buyer in writing of the buyer's right to receive the statement.



Question:
If a seller gives this form to the buyer, does that mean that he/she does not have to provide other disclosure statements?

Answer:
No. All other disclosures mandated by local, state, or federal law must still be provided to the buyer, in addition to the Real Estate Transfer Disclosure Statement.



Question:
What is the liability under this law of a real estate licensee or seller who fails to comply with the disclosure requirements, either by making intentionally inaccurate statements or omissions, or by failing to deliver it promptly.

Answer:
The Real Estate Transfer Disclosure law provides that anyone "who willfully or negligently violates or fails to perform any duty prescribed by . . . (this law) . . . shall be liable in the amount of actual damages suffered by a transferee (buyer)."



Question:
Under this disclosure law, can a closed transaction be invalidated for failure to comply?

Answer:
No. The Real Estate Transfer Disclosure law specifically states that a completed transaction will not be invalidated by non-compliance. However, failure to comply can result in liability.



Question:
Does the seller have to provide a TDS if he/she sells the property "as-is"?

Answer:
Yes. There is no exemption to providing the disclosure statement for an "as is" transaction.


Question:
What is the seller's responsibility when the TDS states that an item is "not working," while the purchase contract warrants that it is operable? For example, let's say the seller states in the Transfer Disclosure Statement that the dishwasher is not functioning. On the other hand, in the deposit receipt the seller warrants that "all built-in appliances are in working order." Is the seller responsible for fixing the dishwasher?

Answer:
Yes. The seller is responsible for living up to his or her contractual obligations. The Transfer Disclosure Statement is not part of the contract; its only function is to provide information to the buyer to enable the buyer to decide whether or not to go through with the transaction. Even if the buyer decides not to cancel based on the TDS with some negative disclosures, the buyer does not waive any of his/her rights under the purchase contract.


NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.

U.S. Housing Boom Over

U.S. Housing Boom Over

By Associated Press 5/19/06

Former Federal Reserve Chairman Alan Greenspan said Thursday that Americans' consumption could taper off somewhat now that the U.S. housing market's "extraordinary boom" has ended.

Greenspan, in his first public U.S. speech since retiring in January from a storied tenure leading the Fed, predicted there is no danger of a total collapse of the housing market.

His comments come on speculation the Fed could pause its cycle of rate hikes as a housing slowdown feeds a cooling of the U.S. economy.

"This has been quite an extraordinary boom," Greenspan said in remarks at the Bond Market Association's 30th anniversary dinner in New York. "Home sales are off, applications are off, everything is going in the same direction. The boom is over, and you can say that with a fairly strong degree of confidence."

Greenspan said he doesn't see home prices falling on a national basis, but instead in certain areas of the country. He warned reduced access of Americans to equity loan extraction would have an economic impact, which has had an "important effect" in stimulating the economy.

The housing market has been one of the economy's biggest economic drivers, racking up record-high sales five years in a row. Rapid appreciation in home prices has helped power consumer spending, boosting the economy.

Federal Reserve officials — including current Chairman Ben Bernanke — came out swinging Thursday in a series of speeches to assuage inflation fears. The Fed, which boosted rates last week for the 16th straight time to 5 percent, has left its options open in terms of future rate decisions.

Greenspan cautioned that it was too early to determine how skyrocketing energy prices will affect consumer spending or lead to inflation. He pointed out that non-financial and non-energy company profit margins were not being suppressed by higher energy costs, and that higher prices at the pump weren't dramatically curtailing driving habits.

"One out of 7 barrels of world oil consumption is consumed on American highways," he said. "People apparently don't change the amount of mileage they drive, they change the vehicles they drive. That of course creates lower consumption ... it eats into purchasing power of other things."

His comments come as Wall Street was spooked by inflation worries after a jump in energy costs pushed U.S. consumer prices up sharply last month, according to a government report. Concerns that rising inflation would send rates higher sent the stock market sharply lower Wednesday.

Greenspan also weighed in on Social Security reform, a subject he knows well after leading a commission named after him in the late 1980s for President Ronald Reagan and Democratic Speaker of the House Tip O'Neil. He believes the funding shortage for Social Security "will get resolved," but identified the real fiscal problem facing the federal government as Medicare.

The former U.S. central bank chief said there is a strong probability the government will not be able to fulfill its promises to those tapping the retirement health-care program after the Baby Boom generation. This could trigger both higher debt and interest rates, he said.

"We probably at this stage under existing law have already committed ourselves to a probability which already is uncomfortable," he said. "It's an obligation of government to promise only what government can deliver."

He called the problem a "political" dilemma, and one that can be fixed while avoiding a crisis. With that, Greenspan said he had no intention of leading another commission to delve into the problem.






NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.

Lenders Offer 50 Year Mortgages

Lenders Offer 50 Year Mortgages


By Noelle Knox and Mindy Fetterman, USA TODAY
Wed May 10, 2006


Those struggling to afford a home may be wondering how long their mortgage payments can be stretched out.
The new answer: a half-century.


A handful of lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the face of record home prices and rising rates.


Most big banks already offer 40-year mortgages, which account for about 5% of all home loans, according to LoanPerformance, a real estate data firm. So far, only a few small lenders have rolled out the five-decades-long mortgages.


"One of the biggest things in California is the high costs of homes," says Alex Diaz Jr. of Statewide Bancorp in Rancho Cucamonga, Calif. "And with rates going up, there's demand from customers (for) longer loans."


Statewide, which introduced its 50-year loan in March, has received about 220 applications, Diaz says.


For cash-squeezed buyers, the longer-term loans are another option. In California, only 14% of people could afford a median-priced home in December, when the median was $548,430, if they had to put down 20%, the California Association of Realtors found.


The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders.


"Mortgage lenders are getting craftier to get the attention of consumers," says Anthony Hsieh, CEO of LendingTree. But, he says, "The consumer needs to slow down and understand the product."


Two issues to keep in mind: A borrower with a 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, borrower's monthly payments could rise.


Still, the 50-year isn't considered as risky as an interest-only loan or a mortgage that lets borrowers pay even less than the interest.


With those loans, a borrower might not build any equity and could end up owing more than a home is worth - called negative amortization.


That's why Anthony Sanchez applied for the 50-year loan to refinance his California home. "I looked at a lot of different options," says Sanchez, 30. "I didn't want to be tempted with negative amortization."


Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed.


"If you're going to be there more than five years, you're gambling," says Marc Savitt of the consumer protection committee for the National Association of Mortgage Brokers. "You don't know what interest rates are going to be. I wouldn't do it."




NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.

California Real Estate Disclosure Forms

California Real Estate Disclosure Forms
By Joe DiPaola

The following are the "property condition" and "proximity" real estate disclosure documents used by Realtors in a typical residential real estate resale transaction. For the most part, the forms refer to California Association of Realtor (CAR) Forms:

CAR Form SA Seller's Advisory (2 pages)
CAR Form BIA Buyer's Inspection Advisory (2 pages)
CAR Form HID For Your Protection Get A Home Inspection (1 page)
Car Form TDS Real Estate Transfer Disclosure Statement (3 pages)
CAR Form DBD Data Base Disclosure (1 page)
CAR Form WHS Water Heater Statement of Compliance (1 page)
CAR Form SDS Smoke Detector Statement of Compliance (1 page)
CAR Form SSD Supplemental Statutory and Contractual Disclosures (1 page)
CAR Form SPQ Seller Property Questionnaire (3 pages)
CAR Form SBSA Statewide Buyer and Seller Advisory (10 pages)
CAR Form FLD Lead Based Paint and Lead Based Hazards Disclosure (2 pages)
CAR Form MCA Market Condition Advisory (2 pages)
CAR Form RGM Radon Gas and Mold Notice and Release Agreement (1 page)
Earthquake Hazards Report (1 page)
Earthquake Booklet: "Home Owners Guide to Earthquake Safety and Environmental Hazards" (54 pages)
Booklet Receipt: "Home Owners Guide to Earthquake Safety and Environmental Hazards"
(1 page)
Preliminary Title Report (from Title Company)

Sellers will want to make the following additional physical condition disclosures, where applicable:
A Pet Damage and Pet Odor Disclosure
An Asbestos Disclosure
An ABS Pipe Disclosure
A Carbon Monoxide Disclosure
A Geological/Soils Disclosure
A Survey/Boundary Disclosure
CAR Form MHTDS Manufactured/Mobile Home Transfer Disclosure Statement (3 pages)
CAR Form HOA Homeowner Association Information Request (2 pages)

To save time and money, I recommend using a professional service to prepare a Natural Hazards Disclosure Report for Seller, such as:
Geo-TechSolutions.com
CalStateReports.com

Depending on the contract negotiated between the parties, Sellers can become contractually obligated to provide a Pest Control Inspection Report, Section 1 and/or Section 2 Clearance (CAR Form WPA Wood Destroying Pest Inspection And Allocation of Cost Addendum). Realtors/Sellers can check the license status of Pest Control Companies by going to the California Structural Pest Control Board at: http://www.pestboard.ca.gov/license.htm

This list is for educational and informational purposes only, and is not meant to be exhaustive. There may be other disclosures required in a transaction, but this list describes the forms that are typically required to disclose the physical condition of the property and/or its proximity to adverse conditions in a residential real estate resale transaction. Please consult with a Realtor or Attorney about your transaction.



NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.

What Are Flood Zones?

WHAT ARE FLOOD ZONES?

Flood zones are land areas identified by the Federal Emergency Management Agency (FEMA). Each flood zone describes that land area in terms of its risk of flooding. Everyone lives in a flood zone -- it's just a question of whether you live in a low-, moderate- or high-risk area.

ZONE EXPLANATION

X
An area that is determined to be outside the 100- and 500-year floodplains

A
Areas of 100-yr flood; base flood elevations and flood hazard factors not determined.

AO
Areas of 100-yr shallow flooding where depths are between one (1) and three (3) feet; average depths of inundation are shown, but no flood hazard factors are determined

AH
Areas of 100-yr shallow flooding where depths are between one (1) and three (3) feet; base flood elevations are shown, but no flood hazard factors are determined.

A1-A30
Areas of 100-yr flood; base flood elevations and flood hazard factors determined.

A99
Areas of 100-yr flood to be protected by flood protection system under construction; base flood elevations and flood hazard factors not determined.

B
Areas between limits of the 100-yr flood and 500-yr flood; or certain areas subject to 100-yr flooding with average depths less than one (1) foot or where the contributing drainage area is less than one square mile; or areas protected by levees from the base flood.

C
Areas of minimal flooding.

D
Areas of undetermined, but possible, flood hazards.

V
Areas of 100-yr coastal flood with velocity (wave action); base flood elevations and flood hazard factors not determined.

V1-V30
Areas of 100-yr coastal flood with velocity (wave action); base flood elevations and flood hazard factors determined.


NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.