The Transfer Disclosure Statement (TDS): What California Sellers Must Disclose

What Is the Transfer Disclosure Statement?

The Transfer Disclosure Statement — commonly called the TDS — is a mandatory seller disclosure form required by California Civil Code §1102 for most residential real estate transactions. It's the seller's sworn statement about what they know about the property's condition, systems, and any material facts that could affect a buyer's decision.

Unlike the NHD report (which is prepared by a third-party provider and covers natural hazard zones) or the preliminary title report (which is prepared by the title company and covers legal encumbrances), the TDS is filled out by the seller personally. It's your direct account of the property — what works, what doesn't, what's been modified, and what problems you're aware of.

The TDS is one of the most consequential documents in a California real estate transaction. Getting it right protects both the seller and the buyer. Getting it wrong — through omission, inaccuracy, or outright concealment — creates legal liability that can result in lawsuits, damages, and rescission of the sale.

Who Must Provide a TDS — and Who's Exempt

The TDS is required for most residential sales of 1–4 unit properties in California. If you're selling a single-family home, condo, townhome, or small multi-family property, you almost certainly need to provide one.

However, several categories of transfers are exempt from the TDS requirement:

• Court-ordered sales — Transfers by court order, including probate sales, foreclosure sales, and sales by a bankruptcy trustee.
• Transfers by fiduciaries — Sales by a conservator, guardian, or personal representative in a probate proceeding.
• Transfers between co-owners — Including transfers incident to divorce or dissolution.
• Transfers to or from a government entity.
• Transfers between spouses — Using interspousal transfer deeds.
• Transfers to or from a trust — When the transferor is the beneficiary.
• Foreclosure sales — Including deed-in-lieu of foreclosure.
• New construction — First sales by a builder (different disclosure requirements apply under the Subdivided Lands Act).

Even when a TDS is technically exempt, California's general duty to disclose material facts still applies. An exempt seller who knows about a serious defect and conceals it can still face liability under fraud or negligence theories. The TDS exemption removes the requirement to use the specific form — it doesn't remove the obligation to be honest.

What the TDS Covers

The TDS form is organized into sections that systematically walk through the property's features, systems, and condition. Here's what each major section covers:

Structural and systems information — The seller identifies the property's features: number of bedrooms and bathrooms, garage, pool/spa, heating and cooling systems, water heater, built-in appliances, electrical system, plumbing, roof type and age, foundation type, and whether the property has a septic or sewer connection. For each system, the seller indicates whether it's in operating condition.

Known defects and conditions — This is the heart of the TDS. The seller discloses known problems: water intrusion, drainage issues, foundation problems, roof leaks, pest infestations, mold, environmental hazards (asbestos, lead, radon), soil problems (settling, sliding, grading), and any other material defects.

Modifications and improvements — Any additions, alterations, or modifications made to the property — and critically, whether they were done with proper permits. Unpermitted work is one of the most common sources of post-sale disputes.

Neighborhood and environmental factors — Noise sources, nuisances, neighborhood conditions, zoning violations, and any other external factors that could affect the property's use or value.

The agent's inspection — In an agent-listed sale, both the listing agent and the buyer's agent complete their own sections of the TDS based on their visual inspection of the property. The agents' disclosures are based on what they observe — they're not required to conduct an invasive investigation, but they must disclose what a reasonably competent visual inspection would reveal.

How to Fill Out the TDS Correctly

Completing the TDS is straightforward in concept but requires careful attention. The goal is comprehensive honesty — not perfection, not diagnosis, but a complete accounting of what you know.

• Walk through the property systematically. Go room by room, system by system. Check each item on the form against your actual knowledge. Don't fill it out from memory at your kitchen table — walk the property with the form in hand.
• Disclose what you know, not what you think. If you've noticed water stains on the ceiling but don't know the cause, disclose the water stains. You're not expected to diagnose problems — you're expected to report observations and known facts.
• Don't minimize or euphemize. "Occasional moisture in the basement during heavy rain" is better than "basement is fine." Describe conditions as they actually are.
• Disclose unpermitted work. If you converted the garage, added a bathroom, or enclosed a patio without permits, say so. Buyers will often discover unpermitted work through city records, the appraisal, or their own inspection — and discovering that you knew and didn't disclose is far worse than the unpermitted work itself.
• When in doubt, disclose. There is no downside to over-disclosure. Disclosing something that turns out to be immaterial costs you nothing. Failing to disclose something that a court later determines was material can cost you everything.
• Date and sign the form. The TDS must be signed and dated by the seller. In a jointly owned property, both owners should sign.

Common TDS Mistakes and How to Avoid Them

The most common TDS errors aren't intentional concealment — they're mistakes of omission, vagueness, or misunderstanding:

Leaving sections blank. Every section of the TDS should be completed. A blank space creates ambiguity — did the seller skip it intentionally, or did they miss it? If a section doesn't apply, write "N/A" rather than leaving it empty.

Using vague language. "Property is in good condition" is not a disclosure — it's a marketing statement. The TDS calls for specific information about specific systems and conditions. Replace generalities with specifics.

Failing to update after discovering new issues. If you discover a new problem after completing the TDS but before closing — a water heater fails, a leak develops, a pest infestation is found — you must amend the TDS. The disclosure obligation is ongoing through closing, not a one-time snapshot.

Not disclosing issues you've already fixed. If the house had a major foundation repair five years ago, disclose it — even though it's been repaired. The repair is part of the property's history, and a buyer may want to understand the scope of the problem and the quality of the fix.

Relying on the inspection to cover your disclosures. The home inspection and the TDS serve different purposes. The inspection is the buyer's investigation of current conditions. The TDS is your disclosure of what you know — including things an inspector might not find (like seasonal flooding, neighbor disputes, or a history of termite treatment).

What Happens If You Don't Disclose

California courts take disclosure obligations seriously. If a buyer discovers an undisclosed material defect after closing, they can pursue several legal remedies:

Rescission — In the most serious cases, the buyer can seek to undo the entire sale — returning the property to the seller and recovering the purchase price. This remedy is typically available when the undisclosed defect is so significant that the buyer wouldn't have purchased the property had they known.

Damages — The buyer can sue for the cost of repairing the undisclosed defect, diminished property value, and in some cases consequential damages (temporary housing costs, lost rental income). If the court finds the seller intentionally concealed the defect, punitive damages may also apply.

The statute of limitations is generally three years from discovery of the defect for negligent misrepresentation, and longer for fraud-based claims (intentional concealment). "Discovery" means when the buyer actually discovered or reasonably should have discovered the problem — not when the sale closed.

The practical lesson: honest disclosure is your best legal protection. Sellers who disclose problems openly are rarely sued — buyers expect some issues in any home. Sellers who conceal known problems are the ones who end up in court.

The TDS and the NHD Report: Different Documents, Different Jobs

The TDS and the NHD report are both required seller disclosures, but they cover entirely different territory:

The TDS covers the property's physical condition — what you as the seller know about the structure, systems, defects, and history. It's your personal knowledge, filled out by you.

The NHD report covers the property's location-based risk — which government-mapped hazard zones the property falls within (flood, fire, earthquake, dam inundation, seismic, and others). It's prepared by a qualified third-party NHD provider, not by you.

One key difference in liability: under Civil Code §1103.4, if you deliver an NHD report from a qualified provider, the liability for any errors in the hazard zone determinations transfers to the NHD company — not you. This safe harbor is one of the strongest reasons to always use a professional NHD provider. The TDS has no equivalent safe harbor — you're personally responsible for the accuracy of your disclosures.

Both documents must be delivered to the buyer during escrow, and the buyer's investigation contingency period doesn't start until all required disclosures are received. Deliver both as early as possible to keep the transaction on schedule.

Check Any Property's Hazard Zones

The NHD report is the companion to your Transfer Disclosure Statement — while the TDS covers what you know about the property's condition, the NHD report covers what the government maps say about its location. Use Verity NHD's free hazard preview tool to check any California property's flood, fire, earthquake, and other hazard zone status instantly. No account required, no credit card, no commitment.