The transfer disclosure statement is one of the most important – if not the most important – document you will review in a disclosure package. While there are a variety of formats for a transfer disclosure statement (affectionately known in industry jargon as the TDS), they all serve one purpose: to help the seller explain any material information that they feel the buyer should be aware of.
// This post is a part of our series: Your Guide to a San Francisco Disclosure Package. //
The Transfer Disclosure Statement is a *property specific* disclosure. If you only had time to read one document before making an offer on a house, I would humbly suggest it should be this one.
A typical transfer disclosure statement is 3 pages, with 2 pages for questions and answers and 1 page dedicated entirely to signatures. The transfer disclosure statement was introduced in the 1970’s as a result of litigation in which a buyer sued a seller for failing to provide relevant information (that’s my non-legal summary, at least) about the property that the buyer purchased from the seller. CA civil code section 1102 now requires a seller to complete and provide to the buyer a transfer disclosure statement if the seller is selling a residential property and it is a “normal” (ie, not a probate or trust) sale.
The questions that are asked on the transfer disclosure statement are also mandated by state law – while the formatting may vary based on who provides the document, the questions are always the same. The transfer disclosure statement begins by identifying the property and stating the date the disclosures are being made. As the document notes, it is not a warranty of any kind, and it is also not a substitute for any inspections (although it can help guide your inspections).
Part 1: Coordination With Other Disclosure Forms
In San Francisco, this section is typically left blank.
Part 2: Seller’s Information
This section requires the seller to inform the buyer if they are occupying the property, what systems/appliances transfer with the property, and general questions about the condition of the property, it’s systems, and questions about items that may impact a buyer’s opinion of the property, or their valuation of it. In general, the golden rule works quite well: If it is something you would like to know about as a buyer, it is something you should note as a seller when completing the TDS.
Part 3, Part 4, and Part 5: Agent’s Inspection Disclosures and Receipt
Both the listing agent and the selling agent (buyer’s agent) are also required to complete what are known as AVIDs or Agent’s Visual Inspection Disclosure. Part 3 is for the listing agent’s AVID, Part 4 is for the selling agent’s AVID, and Part 5 is for both the buyer and seller, as well as the listing agent and selling agent to sign acknowledging receipt of a copy of the TDS. AVIDs have evolved from being a section of the TDS to currently having their own entire form. However, back when the TDS first came info force you would often find agents scribbling down one or two sentences in the small area provided directly on the TDS form for their visual inspection. We will talk more about the AVID when we get to that document in the disclosure package.