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What are the Two Legally Required Real Estate Disclosure Statements?
  1. Transfer Disclosure Statement (TDS)
  2. Natural Hazard Disclosure Report/Statement (NHD)

 

Real Estate Transfer Disclosure Statement (TDS)

The Transfer Disclosure Statement, also known as the TDS, is a form required by California law in most residential real estate transactions pursuant to California Civil Code 1102. This document is one of the seller’s disclosures that buyers receive during their contract contingency period. This TDS form must be completed in the seller’s own handwriting. An agent can help the seller understand what’s being asked, but an agent cannot and will not complete this form for a seller under any circumstances. 

The TDS form covers items on the subject property that the seller is aware of, and therefore has actual knowledge of, anywhere from a leaky roof to whether any deaths occurred on the property in the last three years. The seller will need to include information about all appliances in the home, including which are included in the sale as well as whether they are operational. The seller will also need to disclose any room additions, damage, or neighborhood noise problems. The items seller will disclose here are material facts of seller’s actual knowledge regarding the subject property.

Natural Hazard Disclosure Report/Statement (NHD)

Under California Civil Code 1103, natural hazards that may affect a property are also required to be disclosed. Prior to any home sale, the seller must provide the Natural Hazard Disclosure Report/Statement, also known as the NHD. The NHD poses several “yes/no” questions regarding things like whether the property is located in flood zones, fire zones, fault zones, and/or seismic hazard zones. Along with various locally required natural hazard items that can affect the value and desirability of the property. This information is required to be given to any potential buyer. Seller and seller’s agent can seek out a third party who prepares NHD reports.

Difference Between TDS and NHD

In the event buyer receives incomplete information on the TDS, buyer’s damages will likely be limited to cost of repairs or cost to replace whatever was not completely disclosed.

In the event buyer receives an incomplete NHD, buyer’s potential damages could be the entire value of the property.

All NHD reports are different. Property I.D. provides the most comprehensive and accurate reports. All Property I.D. reports come with E&O insurance, which protects seller, sellers agent, buyer and buyer’s agent.

 

Reference:

http://www.dre.ca.gov/files/pdf/re6.pdf

https://www.thebalance.com/what-is-a-california-transfer-disclosure-statement-1798653


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