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First, what are typical disclosures required of sellers of residential real property?
Generally, whenever a seller of residential real estate enters into a sale of its property, the Seller and its agent, under delineated timelines under the contract, is required under law and under the contract terms to provide certain disclosures regarding the condition of and status of the home to the proposed buyer. Typically, these disclosures are found in Transfer Disclosure Statements (“TDS”) and are key to communicating important information regarding the condition of the property to the potential buyers.
What most sellers of residential real property in California do not realize is that there is a specified legal exemption that exempts certain seller’s from being required to provide those legally required disclosures when the Seller is (1) a trustee of a trust, and (2) that trustee did not own or occupy the property personally within the last year of the pending sale. (See Cal. Civ. Code §1102.2, Health & Safety Code §13113.8(d)(4), and Cal. Civ. Code §1103.1).
The reasoning behind this is simply, generally, when a residential real property is held in trust, it is held for the purpose of transferring that property to the heirs of the property owner. When the property owner dies, the succeeding trustee, in many cases, does not have much knowledge about the condition of the property. Therefore, when that succeeding trustee intends to sell the residential property, it is not in a position to provide the typical disclosures found in the TDS regarding the condition of the property. As such, these trustees should not bear the same risk of nondisclosure imposed on sellers who are currently living in the home, or who are simply alive, and should be expected to know of material issues with their property.
At KAY GHAD LLP, we are dedicated to assisting and advising buyers and sellers of all different classes of real estate assets. For help in your real estate transaction, or any other business need, please contact us at [email protected] or (213) 529-2900.
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