Selling real estate without the assistance of a licensed real estate broker—commonly known as a For Sale By Owner (FSBO) transaction—does not exempt the seller from California’s strict disclosure obligations. While FSBO sellers may believe they are avoiding broker-related legalities, the law imposes non-delegable duties on sellers of residential property to disclose known material facts. Failure to do so exposes the seller to liability for fraud, misrepresentation, rescission, or damages.
This article provides an in-depth explanation of California’s disclosure standards applicable to FSBO sellers, with references to statutory authority, case law, and best practices.
Overview of Seller Disclosure Duties
In California, the seller of residential real property consisting of one to four units is legally obligated to disclose known material facts affecting the value or desirability of the property. This duty is imposed by California Civil Code § 1102 et seq., known collectively as the Transfer Disclosure Statement (TDS) Law.
See Civ. Code § 1102
The TDS Law applies regardless of whether the sale is conducted with or without a broker. That is, FSBO sellers are equally bound by these statutory duties. Under Civil Code § 1102.3, the seller must deliver a completed Transfer Disclosure Statement to the buyer as soon as practicable before transfer of title.
See Civ. Code § 1102.3
The TDS requires the seller to answer detailed questions about:
- The condition of the property’s structural components,
- Known malfunctions or defects,
- Environmental hazards,
- Past or current legal disputes,
- Modifications or additions to the property,
- Neighborhood noise or nuisances.
Duty to Disclose Material Facts—Even Beyond the TDS Form
The TDS is not exhaustive. California courts have held that sellers have an affirmative duty to disclose all material facts known to them that are not reasonably discoverable by the buyer. A fact is “material” if it would affect a reasonable buyer’s decision to purchase or the price offered. See Reed v. King, 145 Cal. App. 3d 261, 265 (1983) (failure to disclose that the property was the site of a murder was material) (view opinion).
Moreover, Karoutas v. HomeFed Bank, 232 Cal. App. 3d 767 (1991), reaffirmed that passive nondisclosure of a material fact—such as known drainage issues—can constitute fraud when the seller has exclusive knowledge of the defect.
(view opinion)
California follows the principle that silence can be actionable if the seller has superior knowledge of a latent defect. FSBO sellers cannot rely on the doctrine of caveat emptor or claim ignorance of disclosure laws.
Supplementary Disclosure Obligations
FSBO sellers must also comply with specialized disclosure statutes, depending on the location and condition of the property:
- Natural Hazard Disclosure (NHD) required under Civ. Code § 1103 if the property is located in a flood zone, earthquake fault zone, fire hazard area, or other designated zone.
See Civ. Code § 1103 - Lead-Based Paint Disclosure, required by federal law (42 U.S.C. § 4852d) for homes built before 1978.
- Mello-Roos and Special Tax Disclosure, required under Gov. Code § 53341.5, if applicable.
See Gov. Code § 53341.5 - Death on the Property: Under Civ. Code § 1710.2, the seller must disclose any death on the property within the past three years, unless it involved AIDS or HIV (which are protected under anti-discrimination law).
See Civ. Code § 1710.2
Importantly, these duties cannot be waived by the buyer, even through an “as-is” clause. See Lingsch v. Savage, 213 Cal. App. 2d 729 (1963) (seller liable despite “as-is” sale if defect was not reasonably observable) (view opinion).
Consequences of Failing to Disclose
Failure to meet disclosure obligations can result in:
- Rescission of the sale contract;
- Monetary damages for diminution in property value;
- Punitive damages if fraud is proven;
- Attorney’s fees, where provided for by contract or statute.
Under Civ. Code § 1102.13, a seller who willfully or negligently fails to deliver the TDS is liable for actual damages suffered by the buyer.
See Civ. Code § 1102.13
Additionally, fraudulent nondisclosure may support a claim for punitive damages under Civ. Code § 3294, particularly where the seller acted with malice or reckless disregard for the buyer’s rights.
See Civ. Code § 3294
FSBO Misconceptions and Legal Exposure
Many FSBO sellers mistakenly assume that avoiding a broker also avoids liability. In fact, real estate brokers have limited immunity under Civ. Code § 1102.4, while sellers do not.
See Civ. Code § 1102.4
Moreover, FSBO sellers who fill out disclosure forms themselves—without legal guidance—often omit required details or use language that is vague or misleading. This creates litigation risk that can outweigh any commission savings.
Conclusion
Selling property without a real estate broker does not eliminate legal obligations under California’s disclosure laws. FSBO sellers are held to the same statutory and common-law standards as licensed professionals—and in many cases face greater exposure due to the absence of professional oversight. Whether the issue is structural defects, boundary disputes, zoning issues, or environmental risks, full disclosure is not just a best practice; it is a legal mandate.
At Guiding Legal Counsel, APC, we assist FSBO sellers in preparing proper disclosure documents, reviewing contracts, and protecting against post-sale liability. If you are considering selling your home without a broker, contact us today to ensure your transaction complies with California law and shields you from future claims.