📄 Transfer Disclosure Statement (TDS) – Agent FAQ Guide

🔹 General Understanding

  1. What is the Transfer Disclosure Statement (TDS)?
    • A statutory form that requires sellers of 1–4 unit residential properties to disclose known material facts and conditions of the property.
  2. Who is required to complete the TDS?
    • The seller, not the agent or broker. However, the listing and buyer’s agent must also complete a visual inspection section.
  3. Is the TDS required for all transactions?
    • Only for 1–4 unit residential properties. It’s not required for commercial, 5+ unit, new construction, or certain exempt transactions.
  4. What if the seller refuses to complete the TDS?
    • The seller may be in violation of disclosure laws. The buyer may cancel the contract or sue for nondisclosure.
  5. What if the buyer waives the TDS?
    • The TDS is required by law—it cannot be waived in most non-exempt transactions.

🔹 Content and Sections of the TDS

  1. What kind of issues does the TDS cover?
    • Structural, mechanical, plumbing, electrical systems, pest issues, environmental hazards, neighborhood nuisances, and more.
  2. What is the listing agent’s responsibility?
    • Conduct a diligent visual inspection and disclose any observable defects.
  3. What is the buyer’s agent’s responsibility?
    • Conduct their own visual inspection and disclose any issues not mentioned in the TDS or known to them.
  4. Are defects outside the home required to be disclosed?
    • If they are observable and could affect the property’s value or desirability, yes.
  5. Can a seller say “unknown” on certain items?
  • Yes, but doing so frequently or without basis may raise red flags.

🔹 Legal and Compliance Questions

  1. What happens if the TDS is delivered late?
  • The buyer gets a right to cancel within 3 days (in person) or 5 days (by mail/email) after receipt.
  1. Are there legal consequences for an incomplete or false TDS?
  • Yes. The seller may be liable for fraud, misrepresentation, or breach of contract.
  1. Does the TDS cover prior repairs or remodels?
  • Yes, especially if they were done without permits or affect habitability or safety.
  1. Is the TDS required in a trust sale?
  • Often no, if the trustee has not occupied the property—but the agent’s visual inspection is still required.
  1. What if new issues arise after the TDS is delivered?
  • The seller must amend or supplement the TDS promptly to avoid liability.

🔹 Practical Application During Transaction

  1. When is the TDS usually delivered?
  • Within the first few days of escrow or ideally before the offer is accepted.
  1. Can a transaction proceed without a TDS?
  • Only if the transaction is legally exempt from the requirement.
  1. What if the buyer finds a defect not listed in the TDS?
  • They can request repairs, cancel, or potentially seek legal recourse depending on timing and severity.
  1. How is the TDS delivered—electronically or physically?
  • Both are acceptable if consistent with escrow and contractual agreements (e.g., via DocuSign, zipForms).
  1. Do agents need to keep a copy in the transaction file?
  • Yes, for DRE audit and legal compliance—generally for 3 years.

âś… Bonus: Key Exemptions from TDS Requirement

  • Foreclosure sales
  • Probate sales (in most cases)
  • Bankruptcy sales
  • Transfers between spouses or family members
  • New home construction with public report
  • REO sales by institutional lenders

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.