A seller in Ventura County, California sued a
buyer for breach of contract [Richman v. Hartley]. The buyer tendered a defense
that the seller failed to provide the state-required property Transfer Disclosure
Statement. The seller argued that the property was primarily for commercial use
although it did include a residential duplex. The buyer prevailed but the
seller appealed the decision. The Court of Appeal ruled that a Transfer
Disclosure Statement must be provided even if the property is primarily used
for commercial purposes, if the property contains 1 to 4 residential units. The
seller lost the appeal.
Sellers of mixed-use properties that include
residential units are now on firm notice to provide buyers with the
state-mandated property disclosure.
Also, parties to a real estate transaction are
not permitted to waive the requirement as this is considered to be against
public policy
Note that some sellers are exempt from the
requirement to provide a Transfer Disclosure Statement. Some examples include:
foreclosures sales; transfers by a fiduciary in the administration of a
decedent’s estate; certain inter-family transfers; new homes; and transfers to
or from governmental agencies.
Source: California Real Estate Law Newsletter,
May 2014
