The Exempt Seller Disclosure, also known as the “ESD”, is a replacement of a previously available document called the Supplemental Statutory and Contractual Disclosures (C.A.R. Form SSD).
The most current version of the one paged ESD disclosure is provided by the California Association of Realtors and was revised in December 2016.
C.A.R’s states that the ESD “provides for the delivery and confirmation of receipt of statutory disclosures and contractual disclosures not provided for in the Real Estate Transfer Disclosure Statement (TDS)”.
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Exempt Seller Disclosure Breakdown
The ESD form provides sellers who are exempt from the TDS a shortened disclosure to disclose any known facts about the subject property.
Section 1 & 2
Section 1 of Exempt Seller Disclosure requires the subject property is properly identified. The document has empty spaces for the street address, city, county, and the assessor’s parcel number. All of these details should already be available and can be confirmed by the preliminary title report.
Section 2 of the ESD is divided into two parts that review the California laws behind this disclosure.
The first is the California law (Civil Code §1102, et seq.) states that the majority of sellers with real property containing one to four residential units are required to give any potential buyers with a completed TDS. However, there are certain situations that exempt the seller from providing that disclosure. Even though the sellers have that exemption, they are still required to disclose material facts they are aware of on the ESD.
Under the second Civil Code Section 1101.4(b) requires sellers to replace non-compliant plumbing fixtures with water conserving plumbing fixtures on any single family home built before January 1, 1994.
Section 3 & 4
In section 3 of the Exempt Seller Disclosure it makes it clear to both sellers and buyers that the following representation made on the disclosure are not of the agent but from the seller. It also states that the ESD is not a warranty and is NOT a substitute for any inspection or warranties the buyer may want. It is also advised to consult a legal professional if desired.
Section 4 begins the questionnaire portion of the disclosure. Questions A through K, eleven in total, are a series of “Yes” or “No” questions that the seller may be aware of. The subjects of each question are the following:
- Death on property
- Methamphetamine contamination
- Illegally controlled substances
- Federal or State ordinance location
- Part of a planned unit development
- Insurance Claims
- Title issues
- Defects affecting property
- Non-compliant plumbing fixtures
If the seller has indicated “Yes” on any of the questions they are required to explain them in the provided empty lines on the disclosure.
Section 5 & 6
The final two sections on the Exempt Seller Disclosure ask for the buyers and sellers to date and sign. In section 5 the seller is signing and acknowledging that the information provided on the ESD is “true and correct” to the best of their knowledge. And by signing they authorize their representation in the transaction to issue a copy of the disclosure to any potential buyer.
And finally the last section allows for the buyer to acknowledge they have received, read and understand the Exempt Seller Disclosure.
When is the ESD used?
The ESD is used when sellers are exempt from the Transfer Disclosure Statement (TDS). This is a rare occurrence for many transactions. When is a seller exempt from a Transfer Disclosure Statement? The following are just some of the situations that are exempt from the TDS.
- Foreclosure sales
- Court ordered transfers
- Administrator of a decedent’s estate, guardianship, conservatorship, or a trust. (except in the case where a Trustee is a former owner of the subject property.)
- Transfer to a spouse
- Transfers from failure to pay taxes
Who Signs the ESD?
Buyers and sellers are required to sign and date at the bottom of the Exempt Seller Disclosure.
The Exempt Seller Disclosure one page makes it difficult to fill out in our opinion. The main areas to watch out for are the assessor’s parcel number section and the questions portion on the disclosure. The assessor’s parcel number (APN), sellers tend to put the wrong numbers and or leave blank. And for the questions portion of the disclosure, it is important to ensure all questions are answered accurately and any “Yes” answers are thoroughly explained on the ESD.
Disclaimer: This article is meant to educate, inform, and comment on a document that is protected by the United States copyright law. This article is only our interpretation of the subject document. We advise the reader to consult their broker or agent on any questions they may have. The reader is also advised to reach out to the California Association of Realtors for any additional information.