On July 13, 2026, Broker Risk Management provided a webinar entitled “A Deep Dive Into Inspections and Disclosures.” The following are answers to questions received by BRM from our clients in addition to those covered in last week’s tip:
QUESTION NO. 1: With regard to whether a trustee is required to complete a Transfer Disclosure Statement (“TDS”), what is the definition of “occupy”? What if a trustee moves out of the property to prepare it for sale? Does that constitute occupation?
RESPONSE: “Occupying” is defined as a trustee who was an occupant in possession of the property within the preceding year. So, if the trustee/seller moves out at the time of sale but had been an occupant in possession of the property at any time in the year prior to the sale, then the trustee seller will be deemed to have occupied the property.
Please recall that this is only one of the requirements as to whether a trustee seller is required to complete a TDS. A trustee is required to complete a TDS if: (1) the trustee/seller has occupied the property for a year or more OR has owned the property; (2) the trustee is a natural person; and (3) the trust is revocable.
See the attached BRM graphic explaining this rule.
Please note that
(a) even if a TDS is not required, the seller is still required to disclose all material defects of which the seller is aware; and,
(b) the factor of whether the seller occupied the property for a year or more ONLY applies to trustee sellers. For all other sellers, whether the seller occupied the property or not does not in itself exempt a non-trustee seller from the requirement to complete a TDS.
QUESTION NO. 2: If a property is being sold by a trustee, but a family member is living at the property and the trustee is exempt from a TDS per the above rules, how should the trustee handle the disclosures?
RESPONSE: A TDS is not required, but best practices for a listing agent would be to recommend that the trustee consult with the family member to inquire as to whether there are any defects or conditions which should be disclosed.
QUESTION NO. 3: If a rental property is being sold and it is managed by a property manager, how should the seller handle disclosures?
RESPONSE: The seller should make an inquiry of the property manager and disclose any material information the property manager has regarding the property. The property manager is considered an agent of the seller and the seller is required to make reasonable inquiries of the seller’s agents regarding the condition.
QUESTION NO. 4: If a seller receives a letter from a neighbor regarding a boundary dispute, but there is no Court proceeding pending, does the letter need to be disclosed?
RESPONSE: Yes. The letter must be disclosed to the buyer with a recommendation that the buyer investigate the issue with the neighbor. However, the listing agent should discuss the letter with the seller to determine if the seller is required to disclose further information regarding the property based on the letter. This also applies to any verbal communication to the listing agent from any person that contains a disclosure of a defect or negative condition affecting the property.
QUESTION NO. 5: If an HOA of a property was involved in a lawsuit affecting the property against the builder, and the owner knows nothing about it, but the agent has personal knowledge regarding it, how should the disclosures be handled?
RESPONSE: The seller will not be able to disclose any information regarding the lawsuit, because the seller has no personal knowledge. However, the agent should disclose all information of which the agent is aware on the agent’s AVID.
QUESTION NO. 6: If the seller completes a TDS and a subsequent home uncovers a material defect of which the seller is unaware, does the seller need to modify the TDS? If so, do they check the box that the home inspection is the substituted disclosure?
RESPONSE: No, the seller does not need to modify the TDS. The TDS is based on the seller’s knowledge of the property. Moreover, if a TDS is amended and provided to a buyer, it reopens the cancellation period (three days if hand-delivered and five days if provided by email or mail). However, the home inspection report should be provided to the buyer.
QUESTION NO. 7: If an HOA has taken action against the seller, to what extent does that need to be disclosed?
RESPONSE: It depends on the action that was taken by the HOA. If it was merely a collection action for monthly fees, that likely does not need to be disclosed. However, if the HOA has taken action for non-compliance with the HOA’s governing documents, such as Covenants, Conditions, and Restrictions, that disclosure should be made to the buyer. The determination of whether to disclose an HOA action is dependent on whether the HOA’s actions could affect the value or desirability of the property.
QUESTION NO. 8: Does the language, “AVID to follow” written on a TDS constitute a complete disclosure giving a buyer right to cancel listing?
RESPONSE: The right to cancel based on a TDS is triggered by the receipt by the buyer of a complete TDS. Complete is defined in CAR’s Residential Purchase Agreement as completed by the seller and the listing agent. If the listing agent has not delivered the listing agent’s AVID, the TDS is not complete and therefore, the time to cancel has not been triggered.
QUESTION NO. 9: Can I attach photographs or a video to an AVID to ensure complete disclosure?
RESPONSE: Yes, photographs and videos can be added to an AVID to ensure full disclosure is provided. In some instances, such depictions are advisable. For example, if a property is improved after the agent’s involvement, many times the before photographs or video can be helpful in providing disclosures to the buyer.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry but rather are intended to suggest good risk management practice.