PRDS: Newly Revised Section I of TDS

When the California Legislature added a definition of what constitutes a "fully completed" Real Estate Transfer Disclosure Statement ("TDS") for purposes of starting a Buyer's rescission/cancellation right, the statute was changed to specify that a Seller must complete both Sections I and II.

Section I of the TDS form has always been an option for Sellers to use other disclosures and reports to satisfy the Seller's disclosure obligations in the TDS where the subject matter of the substituted material was the same. Many Sellers opted not to designate any substituted disclosures but there was no mechanism in the form (aside from not checking either of the two existing boxes) to affirmatively state that the Seller was not using substituted disclosures.

To rectify the problem, Section I of the statutory TDS has been changed this year to add a new checkbox with the following Seller option: "No substituted disclosures for this transfer." The effect of that statutory change is that the Seller must now make a choice in Section I. as to whether or not the Seller will be using any reports or disclosures as substitutes to the Seller's disclosures.

PRDS has changed its TDS to match the statutory form. The PRDS revision date is 5/20 and is available now on Instanet. It will be available in the PRDS library on ZipForms soon. CAR recently made this same change to its TDS form without any announcement and apparently backdated the form revision date to 12/19.

Section I of the statutory TDS now looks like this:

The Seller now has 4 options in responding to Section I of the TDS:

• Seller can check only Box #1 and only reports specified in the contract will be Substituted Disclosures;

• Seller can check only Box #2 but Seller must identify what additional inspection reports or disclosures will be considered Substituted Disclosures in the blank lines;

• Seller can check both Box #1 and Box #2 as long as the information above is entered into the blank line; or

• Seller can check only Box #3 so as to affirmatively state that there are no Substituted Disclosures.

PRDS has also changed the definition of a "fully completed TDS" in Paragraph 10 of the Real Estate Purchase Contract to specify that the Seller must complete Sections I and II. The revision date of the PRDS REPC is 5/20 and it is available online.

For new listings and sales, Agents should go online and secure the newest versions of the PRDS TDS and REPC.

When using the new version of the TDS, both Agents should read what the Seller has written in both Sections I and II to make sure that the form is fully completed, dated and signed by the Seller.