California real estate law requires sellers to disclose all known material facts about a property that could impact its value, even in “as-is” sales. While most sellers must complete detailed forms like the Transfer Disclosure Statement (TDS), some may qualify for exemptions under specific circumstances. However, even exempt sellers must still disclose known material defects.
NOTE – we have a specific companion article about Trustee exemptions here (link here to article to Trustee exemptions). If you’re a Trustee, the below will apply, but review our specific Trustee Article.
NOTE – we have a great companion article on “as is” sales as well here (link here to article on as-is sales).
At Lucas Real Estate, we specialize in guiding sellers in Newport Beach, Costa Mesa, and other coastal Orange County communities through these nuanced requirements. This article explores the situations where sellers, including trustees, may qualify for exemptions and what they still need to disclose.
Who Qualifies for Disclosure Exemptions?
California Civil Code Section 1102 identifies several types of transactions where sellers may be exempt from completing certain disclosure forms, including the TDS.
1. Trustees and Fiduciaries
Trustees managing the sale of a property as part of a trust are among the most common types of exempt sellers. Under California Civil Code Section 1102.2(d), trustees are generally exempt if they have no personal knowledge of the property’s condition.
However, there are critical exceptions:
- Former Owners or Occupants: Trustees who previously owned or occupied the property within the last year are not exempt and must complete the full disclosure forms.
- Material Facts: Even when exempt from the TDS, trustees must disclose known defects, such as a leaking roof or structural issues.
For a deeper dive into trustee-specific exemptions, see our detailed article, “When Are Trustees Exempt From Certain Disclosures in California Real Estate?.”
2. Court-Ordered Sales
Sales conducted under court orders, such as probate sales, foreclosure sales, or bankruptcy proceedings, are exempt. Sellers in these situations often lack detailed knowledge of the property, which justifies the exemption.
3. Foreclosure and Deed in Lieu of Foreclosure
Exemptions also apply to sales related to defaults, such as:
- Transfers by a trustor in default to a beneficiary under a deed of trust.
- Sales by financial institutions following foreclosure.
4. Transfers Between Related Parties
Family transactions are frequently exempt, including:
- Transfers between co-owners.
- Sales or gifts to spouses or direct family members (e.g., parent to child).
- Transfers resulting from divorce settlements or property divisions.
5. Government-Related Transactions
Sales involving government entities, such as those made to or from a city, county, or state agency, do not require completing the TDS.
6. Non-Residential or Lease Transfers
The TDS is not required for:
- Non-residential properties, such as commercial real estate.
- Leases, except for leases with an option to purchase or ground leases with improvements.
Even Exempt Sellers Must Disclose Material Facts
Exemptions from completing disclosure forms like the TDS do not relieve sellers of their obligation to disclose known material defects. California law is clear: if you are aware of issues that could affect the property’s value or desirability, you must disclose them.
Examples of Material Facts
- Structural defects (e.g., a leaking roof or cracked foundation).
- Environmental hazards (e.g., mold or asbestos).
- Recent deaths on the property (disclosure required for deaths within the last three years).
The Exempt Seller Disclosure Form
For sellers who qualify for exemptions, the Exempt Seller Disclosure Form is an excellent tool. It allows sellers to disclose legally required information without completing the full TDS, ensuring compliance with disclosure laws while simplifying the process.
You Cannot Contract Around Disclosure Obligations
Even in “as-is” sales, disclosure requirements cannot be waived. California Civil Code 1102.1 explicitly states that “the delivery of a real estate transfer disclosure statement may not be waived in an ‘as-is’ sale.”
This principle was reinforced in Loughrin v. Superior Court (1993) 15 Cal. App. 4th 1188, where the court clarified that sellers cannot use contract terms to bypass their duty to disclose known material defects.
Why Work With Lucas Real Estate?
Navigating disclosure exemptions can be complex, especially when dealing with trust sales, court-ordered transactions, or family transfers. At Lucas Real Estate, we combine legal expertise with real estate knowledge to ensure compliance and protect our clients’ interests.
Whether you’re a trustee, a fiduciary, or an individual navigating an exempt sale in Newport Beach, Costa Mesa, or other coastal Orange County areas, our team is here to guide you through every step of the process.
Learn More About Trustee Exemptions
If you’re a trustee or managing a trust sale, don’t miss our detailed guide, “When Are Trustees Exempt From Certain Disclosures in California Real Estate?.”
Contact Lucas Real Estate Today
If you’re preparing to sell property in Newport Beach, Costa Mesa, or nearby communities like Huntington Beach or Laguna Beach, trust Lucas Real Estate to handle your transaction with precision and professionalism. From understanding disclosure exemptions to fulfilling your obligations, we ensure a smooth and compliant sale.
For more insights and professional real estate services in Newport Beach, Costa Mesa, and the coastal areas of Orange County, contact Lucas Real Estate today. Let us guide you through your next property transaction with confidence and clarity.
Contact us anytime via phone (949-478-1623) or email (info@lucas-real-estate.com)
Lucas Real Estate – Your Partner in Luxury Real Estate and Legal Guidance in Newport Beach and Coastal Orange County
– Devin Lucas
Author Devin R. Lucas is Real Estate Professional – a Real Estate Attorney, Broker and REALTOR® – specializing in Newport Beach, Costa Mesa and Orange County coastal communities, serving individuals and Trustees in residential real estate.
Lucas Real Estate – Attorney Devin Lucas and CPA Courtney Lucas – are experts in California Real Estate sales, capital gains issues and property tax matters including Propositions 13, 58, 193, 60, 90 and new Proposition 19.
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