Common Types of Disclosure Issues in Real Estate Transactions

Purchasing a property is one of the most significant investments a person can make, and buyers rely heavily on the accuracy and honesty of disclosures provided during the transaction. Unfortunately, not all sellers or agents fulfill their obligations to disclose known issues, leaving buyers to face unexpected problems that can be costly, stressful, and sometimes dangerous.

At Bay Legal, PC, we understand how devastating undisclosed issues can be for buyers, and we are here to help. Below are the most common types of disclosure issues that arise in California real estate transactions, how they can impact buyers, and what steps you can take to protect your rights.

1. Material Defects

California Civil Code Section 1102 requires sellers to disclose all known material defects that could impact a property’s value or habitability in the Transfer Disclosure Statement (TDS). Material defects include:

Structural damage: Foundation cracks, unstable walls, or roof issues
Water intrusion: Roof leaks, plumbing failures, or flooding
Mold: Caused by unresolved water damage, posing serious health risks
Pest infestations: Termites, rodents, or bedbugs that require costly remediation

Failing to disclose material defects can result in claims for damages or rescission of the sale agreement.

2. Environmental Hazards

California law requires the disclosure of known environmental hazards that could pose risks to the property or its occupants, including:

Lead-Based Paint: Disclosure is mandatory for homes built before 1978 under federal and California laws
Radon Gas: A naturally occurring radioactive gas that can accumulate indoors and cause health risks
Asbestos: Often present in insulation or older building materials, which can become hazardous if disturbed
Hazardous Substance Contamination: Proximity to waste sites or spills must be disclosed to buyers

Undisclosed hazards may expose sellers to legal liability and require costly remediation by the buyer.

Relevant Laws:

3. Non-Permitted Work or Unfinished Construction

Sellers are required to disclose any renovations or additions that were performed without obtaining proper permits or inspections. Non-permitted work can result in:

Code violations requiring expensive retrofits
Safety risks from faulty construction or electrical systems
Legal liability for the buyer to bring the work into compliance

Relevant Law:

California Civil Code Section 1102 (General Disclosure Obligations)

4. Easement and Boundary Issues Not Properly Disclosed

California Civil Code Section 1102.6 also mandates disclosure of easements, encroachments, or boundary disputes. Common examples include:

Easements allowing others to use a portion of your property (e.g., for utilities or access)
Encroachments where neighboring structures, such as fences or buildings, extend onto your property
Boundary disputes where property lines are unclear or contested

Failure to disclose these issues can limit a buyer’s use of their property or lead to disputes with neighbors.

5. Misrepresentation of Property History

Sellers must disclose known facts about a property’s history that could impact its value or desirability. Examples include:

Flood or Fire Damage: Any history of significant damage must be disclosed, even if repairs were made
Death on the Property: Under California Civil Code Section 1710.2, sellers must disclose deaths on the property within the past three years if they occurred due to natural causes, accidents, or crimes
Litigation History: Any lawsuits involving the property, such as boundary disputes or construction defect claims, must also be disclosed

How Disclosure Issues Impact Buyers

Undisclosed issues can create significant financial and emotional burdens for buyers, including:

Unexpected repair or remediation costs
Reduced property value due to unresolved defects or hazards
Potential legal liability for code violations or disputes
Health and safety risks for occupants

California law provides legal remedies for buyers affected by disclosure issues, including the right to rescind the purchase, seek monetary damages, or, in cases of fraud, pursue punitive damages.

How Bay Legal, PC Can Help

At Bay Legal, PC, we specialize in protecting buyers who have been harmed by undisclosed issues. Our experienced attorneys can:

Investigate and uncover hidden defects or misrepresentations
Assess the financial and legal impacts of disclosure violations
Guide you through mediation, arbitration, or litigation to hold sellers, agents, and brokers accountable

Contact Us

Contact Bay Legal, PC today to schedule a consultation and learn how we can help you resolve your disclosure dispute. Protecting your rights and investment is our top priority.