Key Takeaways

• California sellers of one-to-four-unit residential property must complete a Transfer Disclosure Statement (TDS) and a Natural Hazard Disclosure (NHD) report, and these obligations cannot be waived in an “as-is” sale.
• A “material defect” is any condition that would meaningfully affect a reasonable buyer’s decision to purchase or the price they would pay — and the seller’s duty extends to known defects even if they’re not obvious.
• Buyers generally have three years from the date of discovery to bring a fraud claim under California Code of Civil Procedure section 338(d), but other deadlines can apply depending on the legal theory.
• Strong non-disclosure cases usually combine documentary evidence (inspection reports, repair invoices, prior disclosures to other buyers) with credible testimony about what the seller knew.
• Most California residential purchase contracts require mediation before a lawsuit, but mediation is a contractual prerequisite to attorney-fee recovery — not a statutory bar to filing suit.

Seller Didn’t Disclose Defects in California? Here’s What You Can Do

A few weeks after move-in, you notice water staining behind a freshly painted wall. The HVAC contractor finds an old leak the seller swore did not exist. A neighbor mentions the foundation work that happened two summers ago — work that never appeared on any of the disclosures you signed.

If this sounds familiar, you are not alone, and you are not without options. California has one of the strongest seller-disclosure regimes in the country, and the law gives buyers real tools to recover when sellers hide what they knew. The hard part is understanding what was required, what was not, and which approach gives you the best chance of recovering your losses.

Talk to a California real estate attorney before your time runs out.

Non-disclosure cases turn on evidence and deadlines. The sooner you preserve documents and start the analysis, the stronger your position. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

What California sellers are legally required to disclose

The backbone of California’s residential disclosure system is the Transfer Disclosure Statement, governed by California Civil Code sections 1102 through 1102.18. Sellers of one-to-four-unit residential property must complete the statutorily prescribed TDS form (Civil Code section 1102.6) and deliver it to the buyer “as soon as practicable before transfer of title.” The companion Natural Hazard Disclosure report, governed by Civil Code sections 1103 through 1103.14, covers flood, fire, earthquake, and seismic-hazard zone information.

These statutory disclosures are not optional, and they cannot be waived. Civil Code section 1102.1 declares any attempt to waive the TDS void. Even an “as-is” sale does not eliminate the duty to deliver the TDS or excuse a seller from common-law fraud liability. The leading case of Lingsch v. Savage (1963) 213 Cal.App.2d 729 established the foundational principle that a seller must disclose material facts known to the seller and not reasonably discoverable by the buyer, and that principle has only been strengthened by subsequent legislation.

Brokers carry their own duties. Easton v. Strassburger (1984) 152 Cal.App.3d 90 imposed an independent duty on real estate brokers to conduct a reasonably competent and diligent visual inspection of accessible areas and to disclose what that inspection reveals — a duty now codified at Civil Code sections 2079 through 2079.6.

Additional disclosures California sellers commonly owe

Depending on the property, sellers also typically need to deliver:

• A federal lead-based paint disclosure for homes built before 1978 (42 U.S.C. section 4852d).
• A Megan’s Law notice under Civil Code section 2079.10a.
• A water-conserving plumbing fixtures statement (Civil Code section 1101.4 and related provisions).
• A smoke detector and carbon monoxide detector compliance statement (Health and Safety Code sections 13260 and 17926).
• In high-fire-severity zones, a defensible space and home-hardening disclosure under Public Resources Code section 4291.
• For homes within a common interest development, the full HOA disclosure packet under Civil Code section 4525.

What qualifies as a “material defect” under California law

A defect is “material” if a reasonable buyer would consider it important in deciding whether to buy or how much to pay. The classic examples include:

• Active or historical water intrusion, mold, or drainage issues.
• Foundation cracks, settlement, or structural movement.
• Roof leaks, even if patched.
• Electrical, plumbing, or HVAC defects.
• Unpermitted additions, conversions, or rooms.
• Soil instability, slope movement, or expansive soils.
• Easements, encroachments, or boundary disputes that affect use.
• Pest infestations and prior pest-control treatments.

Two points often surprise buyers. First, the defect does not have to be visible to be material — a known but concealed problem still has to be disclosed. Second, the seller’s good-faith belief that a problem was “fixed” does not erase the duty to disclose the underlying history. A patched roof leak is still a roof-leak history.

Yes, you can sue a seller after closing

Closing does not extinguish your right to sue for non-disclosure. The legal theories California buyers frequently rely on include:

Intentional misrepresentation (fraud)

The seller knew about the defect, concealed it or made an affirmative false statement, and you relied on that to your detriment. Civil Code sections 1709 and 1710 govern; punitive damages may be available under Civil Code section 3294 on a clear-and-convincing showing of malice, oppression, or fraud.

Negligent misrepresentation

The seller made a statement they had no reasonable basis to believe was true. No scienter requirement, but you still need reliance and damages.

Concealment

The seller failed to disclose a known material fact when there was a duty to disclose. This is often the strongest theory in TDS cases because the duty to disclose is statutory.

Breach of contract

Most California purchase agreements include representations and warranties the seller may have breached.

Already pulled inspection reports and want a real assessment? We can help.

Bay Legal, PC handles California real estate disputes throughout the state. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

How long do you have to sue?

Deadlines depend on the legal theory:

• Fraud or concealment: three years from discovery under Code of Civil Procedure section 338(d). The clock starts when you discovered — or with reasonable diligence should have discovered — the facts supporting your claim.
• Written contract breach: four years under Code of Civil Procedure section 337.
• Claims against a real estate broker for breach of the inspection duty: two years from the date the buyer takes possession under Civil Code section 2079.4.

These windows look generous on paper. They close fast in practice. Evidence walks (witnesses move; contractors retire; documents get tossed), and the longer you wait, the harder the case is to prove. If you suspect a non-disclosure problem, start preserving everything and call an attorney.

Building the evidence that wins

Cases that recover money usually have at least some of the following:

• Inspection reports that document the defect and its likely age.
• Repair invoices, contractor estimates, or photographs showing prior work.
• Disclosure forms from prior listings (sometimes sellers disclose to one buyer, then the deal falls through, and the disclosure quietly disappears the next time around).
• Building department records of prior permits, complaints, or unpermitted work.
• Witness statements from neighbors, prior contractors, or the seller’s own agent.
• Communications — emails, texts, listing remarks — that contradict the seller’s later denials.
• Expert opinion linking the defect to a date or condition that predates the sale.

Is mediation required before suing?

The standard California Association of Realtors Residential Purchase Agreement includes a mediation provision (paragraph 22 of the current form). It is a contractual prerequisite to recovering attorney’s fees, not a statutory bar to filing suit. Buyers who skip mediation and head straight to court can lose the ability to recover fees even on a winning case, so most attorneys send a mediation demand early.

Mediation also often produces faster, cheaper results than litigation, especially when the seller’s insurance carrier is involved. A well-prepared mediation brief that walks the seller through the evidence and the realistic damages exposure can resolve many cases without filing a complaint.

What can you recover?

California fraud and non-disclosure damages in real estate cases are typically measured by Civil Code section 3343, which uses the “out-of-pocket” rule — the difference between what you paid and what the property was actually worth, plus consequential damages like temporary housing, additional repair costs, and lost use. Where the conduct is intentional and malicious, punitive damages under Civil Code section 3294 may be available. In some cases, rescission of the entire transaction is the right remedy.

When to call an attorney

Some non-disclosure problems are small enough to handle directly with the seller. Many are not. It can help to consult a California real estate attorney when:

• The estimated repair cost exceeds five figures.
• The defect was almost certainly known to the seller and was concealed.
• Multiple defects suggest a pattern.
• The seller is unresponsive or hostile.
• Your statute of limitations may be running.
• Insurance or title issues are tangled into the dispute.

Ready to find out what you can actually recover?

Bay Legal, PC offers consultations to help you understand your options and the likely cost-benefit of pursuing a claim. Call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

Frequently Asked Questions

Does an “as-is” sale prevent me from suing for hidden defects?

No. Civil Code section 1102.1 makes the TDS non-waivable, and California courts have repeatedly held that “as-is” clauses do not insulate a seller from liability for failing to disclose known material defects. “As-is” generally means the buyer takes the property in its present visible condition; it does not give the seller a license to hide what they know.

What if the seller “forgot” about the problem?

California law allows good-faith disclosure errors (Civil Code section 1102.7), but “I forgot” is rarely a defense when the documentary record contradicts it. If the seller has prior repair invoices, permits, or insurance claims relating to the defect, a good-faith defense usually does not survive.

Can I get my money back and unwind the deal?

Rescission under Civil Code sections 1689 and 1692 is possible in fraud cases, but it requires prompt notice, restoration of consideration, and a court willing to order the unwinding. It is generally available where damages would be inadequate or where the defect goes to the essence of what you bought.

Do I have to mediate before filing suit?

If your purchase contract includes a CAR-style mediation provision, you should attempt mediation before filing. Skipping it can cost you your right to recover attorney’s fees even if you win the underlying case.

How much does a non-disclosure lawsuit cost?

Costs vary enormously based on complexity, expert witness needs, and whether the case settles in mediation, in early litigation, or only after trial. Many California real estate attorneys (including Bay Legal, PC) offer free or reduced-rate initial consultations to help you scope the case before you commit to anything.

Disclaimer

This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading this article and contacting Bay Legal, PC does not create an attorney-client relationship. The information here is specific to California law, which changes over time, and your situation may involve facts that change the analysis. If you have a real estate question that matters to you, speak with a licensed California attorney about your specific circumstances.