Disclosures Required When Selling Your Home

Wherever you live, be it Atherton or any other city in the Silicon Valley or beyond, each home has its unique ‘secrets’ that sellers are required to share with the future owners. These special conditions must be disclosed during the escrow process to ensure the buyer is fully informed prior to purchasing the property.

Below are situations sellers are obligated to disclose:

1. Natural Hazards

California law requires sellers divulge whether their home is situated in one of six predetermined ‘natural hazard’ zones. Sharing of this information occurs via a “Natural Hazard Disclosure Statement” (NHD).

The six hazard zones are:

  1. A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
  2. An area of potential flooding after a dam failure (also known as an inundation area)
  3. An extremely high fire hazard zone
  4. If the home is within a state fire responsibility area
  5. An earthquake fault zone
  6. A seismic hazard zone

If the NHD document is received by the buyer prior to signing the Purchase Agreement, they are considered fully informed and cannot use this document to rescind. But, if the NHD is delivered after the Purchase Agreement has been signed, the buyers have three days to withdraw from buying the property.

2. Lead Paint

Odds are lead paint is present if your home was built prior to 1978.

Sellers are required to provide the new buyers with the following disclosures regarding lead paint:

  • Provide buyers with a Housing & Urban Development (HUD) pamphlet entitled “Protect Your Family From Lead in Your Home
  • Disclose all known lead-based paint and related hazards and provide all reports available, if any
  • Include a standardized warning as an attachment to the contract
  • Complete and sign statements verifying that requirements have been met
  • Retain the signed acknowledgement for 3 years

In addition to the above, sellers must allow buyers ten days to conduct testing for the presence of lead in the home, should they choose to do so.

3. Mello-Roos Districts

If you are selling a home in a newer area, your property might be subject to the special Mello-Roos tax, which is owed in addition to property tax.

This supplemental tax is used to finance public services and improvements such as police and fire departments, parks, schools, and cultural facilities within that area.

If your home is within one of these districts, you must provide the buyers a ‘Notice of Special Tax” document. If delivered in person, the buyer has three days to withdraw, if sent via the postal service, they are allowed a five day time window during which they can rescind their offer.

Your agent can help you determine if your home is within a designated Mello-Roos area.

4. Condominium/Town Home Requirements

Any home that is within a planned development, such as a condo or townhome, has information and regulations that need to be revealed to the potential buyer. These include:

  • Specifics regarding common areas (recreation rooms, green belts, etc.)
  • Home Owners Association fees
  • Pet limitations
  • Architectural requirements
  • Age restrictions (i.e. senior housing)

This information needs to be divulged to the buyers via the following documentation, as appropriate:

  • Declaration of Restrictions known as “CC&Rs”, or Conditions, Covenants and Restrictions
  • Articles of Incorporation or Articles of Association Bylaws
  • Current financial details and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (i.e. roofs, plumbing etc.), as well as regular and special assessments
  • A statement defining HOA policies and practices when enforcing lien rights or other legal remedies for default in payment of its assessments
  • A summary of the HOA’s property, general liability, earthquake and flood insurance policies
  • A statement describing any age restrictions

The seller will often have to pay a fee for this documentation packet.

When listing your home for sale, passing on all relevant and crucial information to the next owners is a must. They need to be duly informed about any special taxes, requirements, fees, and potential hazards before they sign on the dotted line.

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