1. Required Disclosures When Selling
There are certain statutory disclosures including local ordinances and federal laws that a San
Fernando Valley seller and/or their San Fernando Valley Realtor must comply with and provide to the
buyer, subject to certain exemptions. These disclosures are required in connection with the sale,
transfer or exchange, lease with option to purchase, and ground lease of residential real estate. The
following is a highlight of those disclosures:
Transfer Disclosure Statement Exempt Transactions
The Seller and all real estate agents involved in the San Fernando Valley real estate sale, transfer or
exchange of 1-4 units of residential real estate must complete a transfer disclosure statement, and
deliver it to the buyer. The purpose of the statement is for the seller and all Realtors involved in the
transaction to disclose any material facts or defects known about the property that might influence the
buyer's decision to purchase the property. It is always best to over disclose. It will help keep everyone
out of court.
However, there are certain exempt transactions when a transfer disclosure statement is not required.
The following is a list of those exempt transaction under California Civil Code Section 1102:
oThe sale of new homes as part of a subdivision project where a public report must be delivered to
the purchaser or a public report is not required. If the new homes are sold through a real estate
broker and not a developer, then the real estate broker has a duty to disclose material facts which
might affect the value, desirability and use of the property.
oForeclosures.
oCourt ordered transfers or sales.
oTransfers by a fiduciary of a decedent's estate, a guardianship, conservatorship, or trust, except in
the case where the trustee is a former owner of the property.
oTransfers to a spouse or to children.
oTransfers resulting from a judgment of dissolution of marriage, a legal separation, or from a property
settlement agreement in connection with dissolution of marriage.
oTransfers from one co-owner to another.
oTransfers by the State Controller for unclaimed property.
oTransfers resulting from failure to pay taxes.
oTransfers to or from any governmental entity.
There are two thoughts on when you should deliver the transfer disclosure statement. In order to
avoid your buyer cancelling the contract after execution, you may want to give the buyer a copy of the
transfer disclosure statement at the time you are negotiating the purchase and sale agreement. Other
San Fernando Valley Realtors suggest that the seller deliver the transfer disclosure statement at the
physical inspection.
Natural Hazards Disclosure
Unless the property is exempt from disclosure requirements, all San Fernando Valley sellers and/or
their real estate agents must disclose if the property is in a natural hazards zone such as earthquake,

2. flood or fire. The disclosure must be made on a statutory natural hazards disclosure statement.
Usually, the seller hires a neutral third party who will prepare a report and complete the disclosure
statement. The seller, buyer and their real estate agents must also acknowledge and sign the
disclosure statement.
Property Tax Disclosures
The seller and/or their agent must give the buyer a disclosure statement about supplemental property
tax reassessments and statements and whether there are any mello-roos bonds and taxes if
applicable.
Homeowners Guide to Earthquake Safety
A booklet entitled "Homeowners Guide to Earthquake Safety" must be delivered to the buyer by the
seller and/or their Realtor. If the buyer receives the booklet, then the seller or their agent are not
required to provide any additional information, except of course if the home suffered any earthquake
damage, then it must be disclosed on the transfer disclosure statement.
Lead Based Paint Hazards
Sellers and/or their real estate agents are required to deliver to the buyer a lead based paint hazards
disclosure form and pamphlet entitled "Protect Your Family From Lead In Your Home," regarding any
homes built prior to 1978. Buyers have an opportunity to test for lead based paint if they choose to
under the purchase and sale contract. This disclosure also applies to a lease or rental.
Smoke Detector Compliance
A smoke detector compliance statement must be provided by the seller to the buyer that the property
is in compliance with California law pertaining to smoke detectors. New construction requires a hard
wired smoke detector with a backup battery one. For existing dwellings, the smoke detector may be
battery operated.
California Environmental Hazards
The seller must disclose on the transfer disclosure statement any environmental hazards that they
are aware of that affect the property such as asbestos, radon gas, lead paint, contaminated water or
soil, etc. Also, if the seller or their real estate agent deliver an environmental hazards guide entitled
"Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants", then they do
not have to give the buyer anything additional other than any applicable disclosures on the transfer
disclosure statement with regard to environmental hazards.
Mold Disclosure Form
Although not required by statute, most real estate brokerage firms recommend that the buyer be
given a mold disclosure form. Typically, as part of their physical inspection, the buyer is also given the
opportunity to test for mold should mold be discovered. Generally, the physical home inspector will
advise the buyer if they suspect there is any mold and recommend that further mold testing be done
by a mold remediation company. Not all home inspectors conduct mold inspections. It is up to the
buyer to pay for the mold inspection and the physical inspection.
Structural Pest Control Inspection
State law does not require that a structural pest control inspection and certification be delivered by

3. the seller to the buyer, unless the contract specifies or the buyer's lender requires it. Since a majority
of homes in California have termites, it is recommended that a termite inspection report be given to
the buyer. It is negotiable as to who pays for the report, but generally the seller does.
Energy Conservation Retrofit
There are state, federal and local ordinance laws pertaining to minimum energy conservation. This
includes retrofitting for low flow toilets and showers. Your San Fernando Valley Realtor can provide
you with the applicable information with regard to your Sherman Oaks, Encino, Van Nuys or North
Hollywood home.
Certification Regarding Water Heater Strapping
A certification that the water heater is strapped per earthquake code regulations is required to be
given to the buyer. This can be delivered to the buyer with the Homeowner's Guide to Earthquake
Safety, in the Real Estate Purchase Contract or Receipt for Deposit, or with the transfer disclosure
statement. It is recommended that the seller have the water heater strapped to code prior to putting
the house on the market so that this is not an issue at the time of the buyer's home inspection.
Common Interest Developments
San Fernando Valley homeowners must provide buyers copies of documents governing common
interest developments for townhomes, condos or homes in subdivisions if their property is located in a
common development. These documents are generally provided during the escrow period.
FIRPTA (Foreign Investment in Real Estate Property Tax Act)
Federal law requires that the buyer withhold 10% of the purchase price if the seller is a foreigner.
Transactions under $300,000 are exempt if the buyer intends to reside in the property.
Franchise Tax Board
In certain California real estate sale transactions, buyers must withhold 3 1/3% of the total sales
prices as state income tax and deliver the sums withheld to the State Franchise Tax Board. Check
with your tax adviser for exemptions.
Buyer's Right to Terminate
The buyer has the right to terminate the contract if disclosures are delivered to the buyer after the
execution of the offer to purchase and sale. If the disclosures are personally delivered to the buyer,
the buyer has three days from receipt to terminate. If the disclosures are delivered by mail, then the
buyer has five days from receipt to terminate the contract.
Real estate disclosure laws are complicated, and sellers should consult with their San Fernando
Valley Realtor or their attorney to make sure they are in compliance with all state, local and federal
laws.
Sherman oaks real estate