During the escrow process, you will be informed of specialized conditions that affect the home you wish to purchase. They may include the following:

Transfer Disclosure Statement

The mandatory Transfer Disclosure Statement (TDS) requires sellers to make thorough and detailed disclosures before a sale is finalized. A seller is required to disclose:

• Any malfunctions or defects on the property
• The presence of chemicals on the property
• Any legal claims against the property
• Common neighborhood disturbances, including traffic issues
• The existence of easements or encroachments
• Flooding issues, drainage problems, and other environmental impacts

The TDS must be provided to the buyer before the transaction is finalized. A buyer will have an opportunity to review the disclosure statement and ask follow-up questions and proceed how they see fit.   The main legal requirement is that sellers must disclose any material defects with failure to do so could subject them to liability.

Natural Hazards

California law requires sellers to disclose to you, via a “Natural Hazard Disclosure Statement” or NHD, if properties are located in one of six predetermined “natural hazard” zones. If it is delivered before the agreement is signed, you cannot rescind once signed, however, if it is delivered after signing, then you have three days to rescind the offer. The six zones are:

• A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
• An area of potential flooding after a dam failure
• A very high fire hazard zone
• A wildland fire area, also known as a state fire responsibility area
• An earthquake fault zone
• A seismic hazard zone

Lead Paint

Sellers of properties built prior to 1978 have the following obligations to you:

• Give you a HUD pamphlet entitled “Protect Your Family From Lead in Your Home”
• Disclose all known lead-based paint and related hazards and provide you with any available reports
• 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
• Sellers must give you a 10-day opportunity to test for lead

Mello-Roos Districts

If you are buying a home in a newer area, you may be locating into a Mello-Roos tax district. The seller must provide a “Notice of Special Tax.” If this notice is delivered to you in person, you have three days to rescind your offer. If it’s delivered via U.S. mail, you have five days to decide. A “Mello-Roos Community Facilities District” is formed by a local government, district, or agency to finance public services and facilities including emergency services, parks, schools, libraries, cultural facilities, etc.

HOA Docs

If you’re buying a condominium, townhouse or other planned development, there are things you need to know about common areas such as greenbelts and recreational rooms and the homeowner’s association (HOA). You will be required to make monthly payments to the HOA. Condominiums also may have regulations regarding architectural requirements, pet restrictions, and age restrictions, such as for senior (55+) living. These must be formally disclosed to you during escrow. You may receive this information via the following documents:

• Declaration of Restrictions: Commonly known as “CC&Rs”, or Conditions, Covenants and Restrictions
• Articles of Incorporation or Articles of Association Bylaws
• All current financial information and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (including roofs, plumbing etc.), and regular and special assessments
• A statement describing the HOA’s policies and practices to enforce lien rights or other legal remedies for default in payment to the HOA
• A summary of the HOA’s property, general liability, and earthquake and flood insurance policies
• On existing HOA’s, a statement describing any restrictions on the basis of age
• Many smaller HOAs will not have all of these documents, but must provide what they do have.

Megan’s Law

If a registered sex offender lives in the neighborhood in which you want to locate, you have the right to investigate – this is made possible due to a 1996 statute known as “Megan’s Law.” The seller does not have to disclose such information; however, you may investigate through the following means:

• Log on to: http://caag.state.ca.us/megan/index.htm
• Call (900) 448-3000 to access the California Sex Offender Information Database
• Call your local police to locate a CD-ROM records viewing station.