California Real Estate SalespersonPractice of Real Estate and DisclosuresMedium
During escrow, a seller's agent learns that the property's septic system failed inspection after the TDS was already delivered to the buyer. What is the seller's obligation under California law?
- AThe buyer must discover the issue independently through their own inspection
- BThe seller must provide an amended TDS disclosing the new material fact
- CNo further action is needed since the TDS was already delivered
- DThe seller may disclose the issue verbally at closing instead of in writing
Show answer & explanationAnswer & explanation
Correct answer: B. The seller must provide an amended TDS disclosing the new material fact
California law requires that if a seller learns of new material facts affecting the property after delivering the original TDS but before close of escrow, the seller must provide an amended TDS disclosing the new information, which restarts the buyer's right to rescind for three days (personal delivery) or five days (mail).
Why the other options are wrong
- A. The seller cannot rely on the buyer's own inspection to fulfill the seller's disclosure duty.
- C. Material new information discovered before closing must be disclosed, not ignored.
- D. Verbal disclosure does not satisfy the written TDS requirement under California law.
TDS Amendment Requirement
If a seller discovers new material facts about a property after delivering the original TDS but before close of escrow, the seller must provide an amended TDS to the buyer.
- Amended TDS required for newly discovered material facts
- Triggers new rescission period (3 or 5 days)
- Failure to amend can lead to liability after closing
Memory trick: 'New fact, new form—amend before the storm (of closing).'