Understanding Real Estate Disclosures: A Guide for Buyers

When you fall in love with a home, it is easy to focus on its charming facade, the light streaming through the windows, or the yard that looks perfect for summer barbecues. Beneath these initial impressions, however, lies a complex set of documents collectively known as the disclosure package. Real estate disclosures are intended to illuminate a property’s condition, past repairs, legal constraints, and environmental risks so that a buyer can make an informed decision. In California, disclosures are taken seriously: sellers are obligated to reveal what they know about their property, and buyers have a limited window to review this information before making an offer or the contingencies expire. Even though disclosures can be lengthy and full of unfamiliar terms, understanding them could save you from expensive surprises after closing.

This guide demystifies the major documents you will encounter in a disclosure package. We’ll break down the legal basis for each form, explain what to look for, highlight regional requirements in the San Francisco Bay Area, and offer practical advice about working with professionals. A careful review of the disclosure documents is essential for protecting your investment and ensuring that the property aligns with your lifestyle.

What is a disclosure package?

In California, sellers and their agents must provide a Transfer Disclosure Statement (TDS) and other statutory disclosures that detail known material facts about the property. Beyond the mandatory documents, many sellers include inspection reports, questionnaires, preliminary title reports, and local ordinances to give buyers a holistic picture of the home. Collectively, these documents comprise the disclosure package. Some forms are boilerplate and primarily serve to educate buyers about general risks, while others are tailored to the specific property and contain critical information. As a buyer, your role is to sift through this package to identify red flags - issues that may affect your health, safety, finances, or ability to use the property as intended.

Disclosure packages are typically delivered electronically during the pre‑offer stage for competitive listings. You should review them thoroughly either before making an offer or during your due diligence period (the time between offer acceptance and removal of contingencies). Failing to do so could mean waiving your right to cancel if a major problem surfaces later. The guidance in this article will help you prioritize your reading and know when to call in experts.

Transfer Disclosure Statement (TDS)

The Transfer Disclosure Statement is the backbone of California’s disclosure laws. According to the California Department of Real Estate (DRE), sellers and their brokers must provide this statement to a buyer “as soon as practicable before transfer of title”. The TDS is not a warranty; it simply records what the seller knows about the property, and it does not substitute for professional inspections. When you read a TDS, you are essentially peering into the seller’s memory of the home’s history.

What it covers

The TDS is structured as a checklist of systems, appliances and structural features. Sellers must indicate whether items like the roof, plumbing, electrical system, heating/cooling and built‑in appliances are operational and if any repairs are needed. The form covers both interior and exterior components, including walls, windows, stairs, insulation, drainage and even the presence of neighborhood nuisances. The DRE’s sample TDS lists over fifty elements, from foundation issues and water leaks to problems with smoke detectors or carbon monoxide alarms. If the seller leaves items blank or marks “unknown,” it is your cue to investigate further.

How to read it

Because the TDS relies on the seller’s recollection, it may omit issues that the seller is unaware of or unwilling to disclose. That is why you should treat it as a starting point rather than a comprehensive diagnosis. Pay special attention to any boxes checked “Yes,” such as past roof leaks, foundation cracks or history of pest infestations. These items may not necessarily be deal‑breakers if repairs have been made, but they signal areas where you should request documentation or further inspection. Also note the dates of any renovations; a recent remodel might be appealing, but you will want to verify that work was done with permits.

If you see a disclosure that a neighbor disputes property lines or that there are disputes about fences, it may hint at ongoing boundary issues. Similarly, disclosures of “recent water intrusion” should prompt you to ask whether the problem was fixed or whether there are underlying drainage issues. In short, the TDS is one of your first glimpses into potential red flags, but it must be corroborated with independent inspections and third‑party reports.

Seller Property Questionnaire (SPQ)

The Seller Property Questionnaire is not required by state law but is mandated by the California Association of Realtors (C.A.R.) purchase agreement. The SPQ helps sellers remember and disclose facts that might not appear on the TDS. According to a California publication, the SPQ contains over fifty questions that “jog the seller’s memory”. It covers topics like neighborhood noise, disputes with contractors, improvements done without permits, and whether anyone has died on the property within the last three years.

Why it matters

The SPQ goes beyond the mechanical components of the TDS to address lifestyle factors. For example, the seller must disclose whether pets or pests are present, whether there are boundary or easement disputes, if there are known environmental hazards, and even if there are existing insurance claims. Reading through the SPQ can reveal issues that might affect your enjoyment of the home, such as noisy neighbors, parking disputes, or lingering odors. It can also signal potential liabilities, like unpermitted additions that might need to be brought up to code. Because the SPQ is more narrative and open‑ended than the TDS, sellers may inadvertently reveal concerns they did not think were significant. For buyers, these disclosures can inform negotiations or contingency decisions.

San Francisco Seller Disclosure (SFSD) and related local forms

San Francisco has its own Seller Disclosure form, sometimes referred to as the SFSD, which consolidates many local requirements that are not covered by statewide documents. This form supplements the TDS and SPQ by asking the seller to provide additional information specific to San Francisco, such as compliance with local ordinances, known neighborhood nuisances, the presence of rented or unpermitted units, and any seller‑financing arrangements.

The SFSD package also incorporates the city’s Energy and Water Conservation Compliance requirements. San Francisco’s ordinance mandates that sellers perform both an energy and a water inspection and complete specified conservation measures before transferring title. Water conservation measures- including installation of low‑flow toilets, showerheads and faucet aerators- must be completed for each sale, while energy conservation measures like insulation and weather stripping may be waived only if a compliance certificate has been recorded within the past five years. Buyers should verify that a compliance certificate exists; otherwise the responsibility to upgrade could fall on them and add unexpected costs.

Natural Hazard Disclosure (NHD) Report

California law requires sellers to provide a Natural Hazard Disclosure when the property lies in certain hazard zones. A third‑party NHD report typically identifies if the property is in:
• Special flood hazard areas - FEMA’s 1% annual chance flood zones. Properties in these areas often require flood insurance.
• Dam inundation zones - areas subject to flooding if a nearby dam fails.
• Very high fire hazard severity zones and wildland urban interface - zones where building codes require fire‑resistant materials and defensible space.
• Earthquake fault zones - within a certain distance of an active fault where buildings may be subject to rupture.
• Seismic hazard zones - areas susceptible to liquefaction or landslides.
• Industrial or environmental hazard areas - near airports, military bases or contamination sites that affect quality of life.

How to use the NHD

An NHD report may look like a generic list of zones, but it has practical implications. If the home is in a flood zone, your lender may require flood insurance, which can add to your annual costs. Properties in high fire hazard zones may require you to clear vegetation and retrofit roofs or decks with fire‑resistant materials. Proximity to a fault line does not guarantee damage, but it could affect insurance premiums and future resale value. Industrial hazard disclosures may alert you to noise from airports or odors from manufacturing plants. Review the NHD in conjunction with local planning maps to visualize these risks and talk to your insurance agent about coverage requirements.

Home Inspection Report

A professional home inspection is perhaps the most detailed snapshot of a property’s condition. Unlike the seller‑completed TDS, a home inspection is performed by a licensed professional who examines the structure, systems and accessible components. Though inspection reports vary, most cover the roof, foundation, walls, electrical and plumbing systems, heating/cooling, ventilation, appliances, attic and crawl spaces. The inspector notes deficiencies, safety issues and the expected lifespan of major systems. Red flags include active leaks, evidence of moisture in crawl spaces or attics, foundation, outdated wiring, failing roofs and malfunctioning heating or cooling systems.

Why is this report so important? It allows you to quantify the cost of repairs or maintenance. For instance, if the report indicates that the furnace is at the end of its life, you can research replacement costs or negotiate with the seller. The home inspection also reveals minor issues that may become major if ignored, like inadequate attic insulation or a slow drain. Keep in mind that inspectors cannot see through walls; their observations are limited to accessible areas. That is why the report may recommend further specialized inspections for chimneys, roofs, or structural engineering.

Pest Inspection Report

In California, pest inspections (often called termite inspections) are not mandated by law but are commonly required by lenders. The California Structural Pest Control Board explains that a pest inspection is a “visual inspection of accessible areas of a structure” for evidence of wood‑destroying organisms. Inspectors look for active infestations, signs of damage, and conditions conducive to infestation, such as earth‑to‑wood contact, moisture, or improperly stored wood. While there is no statewide law requiring this report, many lenders will not fund a mortgage until a pest inspection has been completed and any Section 1 items (active infestations or leaks) have been remedied. A report should state whether damage is caused by pests or conditions like fungus and highlight any areas needing immediate treatment.

What to look for

Carefully read whether the report finds Section 1 items (active infestation or leaks needing correction) or Section 2 conditions (deferred maintenance or conducive conditions that could lead to future infestation). Section 1 items usually must be addressed quickly, sometimes as a condition of closing. Section 2 items may not be urgent, but could worsen if ignored. Ask whether repairs were completed and whether there is a warranty for any pest treatment. In certain older homes, pest inspectors may not check behind walls or under carpeting.

Other Inspections

Depending on the property’s age, location, and unique features, you may need additional inspections. A roof inspection is advisable if the roof is at least ten years old. Chimney inspections ensure that flues are intact and safe. Sewer line inspections using a camera can reveal root intrusions or cracks. Mold inspections test for airborne spores in areas with persistent moisture. In hillside areas, a geotechnical survey may be recommended to assess soil stability. Always discuss with your agent and inspector which additional tests are appropriate for your market, and consider the cost of these inspections a worthwhile investment.

Agent Visual Inspection Disclosure (AVID)

In California, real estate agents representing the seller and buyer must perform a reasonably competent and diligent visual inspection of accessible areas and disclose anything that might materially affect the property’s value or desirability. This requirement is codified in the Agent Visual Inspection Disclosure (AVID). The C.A.R. form explains that an agent’s inspection is limited: agents are not required to climb onto roofs, look behind furniture, or move personal property. They must note what they observe, such as water stains, cracks, odors, or other conditions suggesting defects.

Using the AVID

The AVID’s comments can highlight issues that the seller might not have mentioned. For example, an agent might note “visible staining under the upstairs window” or “uneven flooring near the back door,” clues that could indicate leaks or foundation settlement. Keep in mind that agents are not experts; they cannot diagnose the cause of problems. Use the AVID to identify areas requiring professional evaluation. 

Preliminary Title Report

The preliminary title report (sometimes called a prelim) is produced by a title company during escrow. It identifies the current vested owners, legal descriptions, easements, liens, encumbrances, and restrictive covenants (CC&Rs) associated with the property. Unlike a TDS or inspection report, the prelim deals with legal rights. The California Land Title Association clarifies that a preliminary report is an offer to insure, not a guarantee of a clear title. It shows what the title company will exclude from coverage and alerts buyers to recorded matters affecting the property.

Why you should read it

Within the prelim, look for the following:

• Liens and encumbrances: Are there unpaid mortgages, tax liens, or mechanics’ liens? These must be cleared before closing.
• Easements: Easements grant others the right to use part of your property, such as utility company access. Some easements are obvious, like power poles; others may restrict how you can build or plant.
• CC&Rs (Covenants, Conditions and Restrictions): Recorded restrictions that may limit the use of the property, such as prohibiting additional structures or certain exterior colors.
• Owner’s rights: Ensure the seller actually owns the property and that there are no co‑owners whose signatures are required.

The prelim will not list every possible issue; there are standard exclusions like unrecorded liens or matters that would be discovered by a survey, and it emphasises that the report is not a representation of the “condition of title”. If you do not understand something, consult your real estate attorney or title officer. Do not assume the report is boilerplate; unique easements or restrictions may materially affect your plans, especially if you intend to rent, remodel, or add to the property.

Square Footage and Lot Size Advisory

Many listings proudly advertise square footage, but there is no single authoritative source for measuring it. The C.A.R. Square Footage and Lot Size Advisory reminds buyers that there is no official measurement and that sources such as tax records, appraiser measurements, and builder plans may differ. The advisory warns buyers not to rely on representations of square footage and to conduct their own measurements or hire experts. It also notes that walls, fences, or hedges may not reflect the legal lot boundaries and that agents are not qualified to measure property.

Parking and Storage Information

Parking and storage can be some of the most contentious issues in urban real estate. In condominium developments, spaces may be deeded or assigned as “limited common elements.” A title company article notes that fee simple parking spaces are owned outright with the unit, while limited common element spaces are assigned by the Homeowners’ Association (HOA) and may be subject to reallocation. The article cautions that title insurance typically does not insure limited common element parking and that buyers must review the condominium declaration to confirm that the space is assigned and cannot be reassigned. In some buildings, valet parking is available but not guaranteed or is leased separately. Always verify the exact parking rights by reviewing the condo map and declarations.

Condo Disclosure Packages

Buying a condominium introduces another layer of documents. The Condominium Disclosure Package typically includes:

• CC&Rs and Bylaws: These documents outline rules about pet policies, rental restrictions, noise, remodeling approvals, and insurance requirements.
• HOA Budget and Reserves: A financial snapshot of the HOA’s ability to cover maintenance, repairs, and unexpected costs. Low reserves may mean a special assessment is on the horizon.
• Meeting Minutes and Litigation History: These reveal issues the HOA is dealing with, such as upcoming major repairs, disputes between owners, or lawsuits.
• Insurance Summary: Evidence of HOA’s master insurance policy, which may impact your own coverage.
• Parking and Storage Documents: Clarification about assigned spaces and storage lockers.

Reading condo documents is time‑consuming, but do not skip them. They reveal whether the HOA is well‑run, has adequate reserves, and enforces rules that align with your lifestyle. For example, if you plan to rent out your unit occasionally, check whether rentals are allowed. If the HOA has pending litigation, lenders may refuse to fund mortgages in the building, limiting your resale options. Work with your agent and a real estate attorney to interpret these documents.

Regional Specific Disclosures in the Bay Area

The San Francisco Bay Area’s diverse geography and patchwork of city ordinances mean there are additional disclosures and inspections required in certain counties. Being aware of these before making an offer can help you plan for extra costs and avoid last‑minute surprises.

San Francisco Energy and Water Conservation Compliance

San Francisco’s Residential Energy and Water Conservation Ordinance requires sellers to bring certain energy and water systems up to code before transferring title. The Department of Building Inspection states that sellers must complete water conservation measures, such as installing low‑flow showerheads and toilets, for each sale. Energy conservation measures, like insulating hot water pipes and attics or installing weather stripping, may be waived if there is a recorded compliance certificate issued within the last five years. Buyers should ask the seller for the certificate; without it, you might have to retrofit the home yourself after closing. These upgrades improve efficiency but can cost a few thousand dollars. Factor them into your budget and verify compliance early, as contractors may have waitlists.

East Bay Sewer Lateral Compliance

The East Bay Municipal Utility District (EBMUD) requires a Private Sewer Lateral (PSL) Compliance Certificate for most properties in Oakland, Berkeley, Alameda and other East Bay cities. EBMUD explains that sellers must test their sewer lateral—the pipe connecting the home to the public sewer—for leaks and defects. If the lateral passes, a compliance certificate is valid for ten years. If repairs are needed, the seller can apply for a Time Extension Certificate allowing them to close escrow before repairs, but the work must be completed within a specified period. In condo complexes, the HOA may be responsible for shared laterals. Without a certificate, you may be unable to close or face fines. Always verify whether a compliance certificate exists and whether the cost of repairs has been negotiated.

Oakland Sidewalk Certification

In Oakland, property owners must inspect and repair sidewalks abutting their property and obtain a Sidewalk Compliance Certificate before transferring title or performing renovations. The city’s FAQ notes that effective July 9 2019, owners must have the sidewalk inspected and repaired if necessary. The new certificate must be provided at close of escrow or when submitting renovation plans. Owners who cannot complete repairs before closing may apply for a provisional certificate granting 120 days to complete the work, but it must be issued before the transfer. If you buy a property without a valid certificate, you may inherit liability for sidewalk repairs, which can be expensive.

Rural Well and Septic Inspections

Many rural counties require well and septic inspections at the point of sale. Santa Cruz County, for instance, enacted a new ordinance effective September 1 2025 requiring testing of private wells for water quality and yield before a sale and that the results be shared with the buyer and the county. The county already required septic inspections, and the new well test ensures that buyers know whether the water supply is adequate and safe. Other counties may have similar requirements or require water potability tests. If you are buying a rural property, ask your agent which inspections are mandatory and whether there are any known issues with wells, septic systems or water rights.

Red Flags to Watch For

As you review disclosure documents, watch for the following red flags:

• Exterior and environmental factors you cannot change: Properties near busy roads, airports or industrial sites may have chronic noise or pollution issues. Natural hazard reports indicating flood, fire or seismic risks may entail expensive insurance and mitigation costs. Industrial or airport hazard disclosures point to quality‑of‑life factors.

• Tenant issues: If the property is tenant‑occupied, review the lease, tenant rights and local rent control ordinances. Problems can include non‑paying tenants, illegal units or eviction constraints.

• Unpermitted work: Additions or remodels done without permits may not meet building codes. You may be required to tear down unpermitted structures or bring them up to code, at your expense. Look for disclosures of unpermitted work in the SPQ and verify with municipal building records.

• Outstanding liens or legal disputes: The preliminary title report will reveal liens; significant unpaid amounts or active lawsuits can delay or derail closing. Litigation in an HOA may signal financial problems that could result in special assessments.

• High‑cost repairs: Major foundation issues, failing roofs, outdated electrical systems or active pest infestations often require immediate attention and significant funds. Use inspection reports to estimate costs and decide whether to negotiate repairs or walk away.

• Neighborhood restrictions: CC&Rs may prohibit future changes you envision, such as building an accessory dwelling unit (ADU), keeping certain pets or using your property for short‑term rentals. If you are buying with a particular use in mind, confirm that it is allowed.

The Importance of Working with a Professional Agent

While this guide equips you with knowledge, navigating disclosure documents can still be overwhelming. An experienced real estate agent is your ally in interpreting disclosures, coordinating inspections and negotiating repairs or price adjustments. A good agent will take the time to understand your priorities and explain the significance of each document. They should also have relationships with inspectors, contractors and attorneys to ensure you receive expert advice. Importantly, they will help you maintain perspective: not every issue is a deal‑breaker, but some may be unacceptable for your lifestyle or budget.

Tips for Effective Disclosure Review

1. Work with a trusted agent: Before diving into documents, make sure you have a reliable real estate professional on your side. An experienced agent will take the time to understand your needs, limitations, and deal‑breakers, watch for red flags, and always keep your best interests at heart. I can help you prioritize which disclosures matter most and provide context for anything that is unclear.

2. Start early: Do not wait until the last day of your contingency period to review documents. Begin as soon as you receive them so you have time to ask questions and order additional inspections.

3. Organize documents: Create a checklist of required disclosures and confirm that you have received each one. Make notes about issues to investigate further.

4. Prioritize high‑impact forms: Focus first on the TDS, SPQ, NHD, inspection reports, prelim and local ordinance compliance forms. These documents are likely to contain information that could influence your decision to proceed.

5. Ask clarifying questions: If you see vague disclosures (e.g., “past water intrusion”), request details and documentation. Misunderstandings now can become issues later.

6. Consult experts: When in doubt, hire specialists - structural engineers, surveyors, plumbers, or attorneys. Their opinions carry weight and can save you money by uncovering hidden problems.

7. Consider insurance: In high‑risk zones, estimate the cost of additional insurance policies, like flood or earthquake insurance, before finalizing your budget.

8. Think long‑term: Consider how the property will fit your needs not just now but in the future. A disclosure about a shared driveway might not bother you today, but could complicate resale later. A condo with low reserves might face special assessments in a few years.

Conclusion

Buying a home is both exhilarating and nerve‑wracking. The disclosure package can feel like a daunting bundle of legal forms and reports, but investing time to understand it will pay dividends. The Transfer Disclosure Statement and Seller Property Questionnaire lay the groundwork for understanding a property’s history and the seller’s knowledge of defects. Natural Hazard Disclosures, energy and water conservation ordinances, and regional inspections give you insight into environmental risks and local rules. Professional home and pest inspections reveal hidden structural and pest problems. The preliminary title report, square footage advisory and condo documents inform you about legal rights and restrictions. Together, these disclosures help you answer the fundamental question: Is this property right for me?

Approach disclosures with curiosity and diligence. Do not be afraid to ask questions, consult experts or even walk away from a deal that does not align with your needs. A knowledgeable real estate agent will guide you through the process, but ultimately it is your responsibility to read and understand the documents. By demystifying the disclosure package, this guide empowers you to make confident decisions and find a home that truly suits your lifestyle.

Need guidance? I’d love to hear from you. Whether you have questions about a disclosure, are thinking about buying or selling, or just want to chat about the San Francisco market over a good cup of coffee, feel free to reach out. As a local agent, I’m here to help you navigate the process and find a home that fits your life.