Transfer Disclosure Statement Has Been Amended

Effective July 1, 2014, the Transfer Disclosure Statement has been amended to require a seller to disclose if a seller is aware of certain construction defect claims under SB800.

The revised TDS inquires whether a seller is aware of any of the following claims threatening to or effecting the property:  1) claims for damages by the seller based on construction defects; 2) claims for breach of warranty; or 3) claims for breach of an enhanced protection agreement, including any lawsuits or claims for damages under Civil Code §910 or 914 alleging a defect or a deficiency in property or common areas.  These changes relate to claims arising out of SB800 including Civil Code §895-945.5.

SB800 was a Senate Bill that was previously passed by the legislature.  The legislation was supported by the building industry to minimize construction defect litigation.  While it is a quite detailed set of statutes, in general, it allows a builder to require a homeowner in new construction to notify the builder of any potential claims or construction defects prior to filing suit.  The builder then has an opportunity to correct those defects.  The builder may also require buyers to mediate and/or arbitrate.

The purpose of the change of the TDS is to require any homeowners who have claims against a builder under SB800 to disclose those claims to new buyers.  The California Association of Realtors has posted an updated version on Zip Forms.

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