What You Should Know About the Transfer Disclosure Statement

The transfer disclosure statement is one of the most important – if not the most important – document you will review in a disclosure package. While there are a variety of formats for a transfer disclosure statement (affectionately known in industry jargon as the TDS), they all serve one purpose: to help the seller explain any material information that they feel the buyer should be aware of.

// This post is a part of our series: Your Guide to a San Francisco Disclosure Package. //

The Transfer Disclosure Statement is a *property specific* disclosure. If you only had time to read one document before making an offer on a house, I would humbly suggest it should be this one.

Page 1 of a California Transfer Disclosure Statement
Page 1 of a California Transfer Disclosure Statement

A typical transfer disclosure statement is 3 pages, with 2 pages for questions and answers and 1 page dedicated entirely to signatures. The transfer disclosure statement was introduced in the 1970’s as a result of litigation in which a buyer sued a seller for failing to provide relevant information (that’s my non-legal summary, at least) about the property that the buyer purchased from the seller. CA civil code section 1102 now requires a seller to complete and provide to the buyer a transfer disclosure statement if the seller is selling a residential property and it is a “normal” (ie, not a probate or trust) sale.

The questions that are asked on the transfer disclosure statement are also mandated by state law – while the formatting may vary based on who provides the document, the questions are always the same. The transfer disclosure statement begins by identifying the property and stating the date the disclosures are being made. As the document notes, it is not a warranty of any kind, and it is also not a substitute for any inspections (although it can help guide your inspections).

Part 1: Coordination With Other Disclosure Forms

In San Francisco, this section is typically left blank.

Part 2: Seller’s Information

This section requires the seller to inform the buyer if they are occupying the property, what systems/appliances transfer with the property, and general questions about the condition of the property, it’s systems, and questions about items that may impact a buyer’s opinion of the property, or their valuation of it. In general, the golden rule works quite well: If it is something you would like to know about as a buyer, it is something you should note as a seller when completing the TDS.

Part 3, Part 4, and Part 5: Agent’s Inspection Disclosures and Receipt

Both the listing agent and the selling agent (buyer’s agent) are also required to complete what are known as AVIDs or Agent’s Visual Inspection Disclosure. Part 3 is for the listing agent’s AVID, Part 4 is for the selling agent’s AVID, and Part 5 is for both the buyer and seller, as well as the listing agent and selling agent to sign acknowledging receipt of a copy of the TDS. AVIDs have evolved from being a section of the TDS to currently having their own entire form. However, back when the TDS first came info force you would often find agents scribbling down one or two sentences in the small area provided directly on the TDS form for their visual inspection. We will talk more about the AVID when we get to that document in the disclosure package.

Post-wedding paperwork, Part II

A few days ago I wrote about adding a new spouse to the title of your home after getting married, and a reader commented that he wondered if the tax benefits provided to same-sex registered domestic partners would be the same as the benefits for married partners. I’ve done some research into the and will preface this post with a big fat disclaimer: I’m not an attorney, I’m not a CPA, I’m not a tax advisor, and I don’t play any of these on TV. I’m summarizing what I’ve found and I’m encouraging anyone who needs advice on how to hold title to real property or how to file their taxes to consult their financial gurus. There. That’s out of the way. Now, on to what I’ve found out.

Because we work in San Francisco, I will focus on California, which allows domestic partnerships as well as same-sex marriages.

In a nutshell, in terms of owning property, the demise of Section 3 of DOMA (the Defense of Marriage Act, passed in 1996 and partially struck down by the Supreme Court in 2013) has now allowed same-sex married couples to enjoy the same benefits given to opposite-sex married couples. In California, both same-sex married couples and registered domestic partners can hold title as community property with the right of survivorship. Same-sex married couples also benefit from the other 1,137 protections and responsibilities granted to married couples from the federal government.

Our reader’s question was about domestic partnership vs. marriage. He asked: “is there any benefit or disadvantage from a real estate perspective to marrying vs. remaining in a domestic partnership? Doesn’t *seem* like there’s much tax difference between the two because of our robust DP benefits here in California.” My research didn’t produce any substantial real-estate-related differences; domestic partners can hold title as community property and thus receive the tax benefits associated with that method of holding title.

So, in California, if we look just at real estate, I didn’t find any major differences between same-sex marriages and registered domestic partnerships. If any readers know of anything that I didn’t discover in researching this topic, please let me know in the comments or via email. I’d be happy to post an update if I missed anything important.

Post-wedding paperwork

Say you own a home by yourself. Then, OKCupid or Match.com or your sister or your roommate or your personal trainer hooks you up on a date that turns out really well, and time passes, and you get married. Yay! Congratulations to you and yours. (Shameless plug for happiness: I just got married at the beginning of March and am on my way through the paperwork to-do list that follows the nuptials.)

This is a real estate blog, so I’ll start with things to consider about your property now that you’re married. For the sake of simplicity, I’m going to assume that there’s only one property. If there are two: lather, rinse, repeat for home #2 (with a few modifications that I’ll mention later).

OK, you’re back from the honeymoon and it’s time to get busy. No, not like that — this is a G-rated blog! I mean it’s time to decide how you’d like to hold title to your property. If you live in California, which is a community property state, property acquired before marriage is considered separate property — i.e., it belongs to the spouse who owned it before getting hitched. If you want to own the property jointly with your spouse, you can add him or her to title by way of a grant deed that you will sign granting ownership to You & Your New Spouse, husband & wife (or wife & husband, or spouse & spouse) as community property with right of survivorship, if that’s what you choose. I’m not a tax advisor nor am I an attorney so I will say that you should seek the advice of a CPA or an attorney about how to hold title; there are some pretty significant tax implications that make this a very important decision.

How do you accomplish the change to title? Talk to your attorney or your favorite escrow officer to draw up the deed, then have it notarized and recorded in the public records in your county. A few caveats: Check with your lender to make sure that adding a spouse to title is acceptable (most lenders are OK with this but you don’t want to find out the hard way that your lender is not). Most jurisdictions do not consider adding a spouse to title as a taxable event and no transfer tax would be due, but again, it’s worth checking before you start deeding.

For the sake of discussion regarding insurance, let’s add a second property to the mix. Presumably you and spouse will live in one and rent the other. Be sure to convert the insurance for property #2 to the correct type of policy for a rental property. And it’s a good time to review the policy for the home that you’ll live in — make sure you have sufficient coverage for personal property (which might need to increase based on the belongings that Spouse moves in).

These are just a few tips for post-wedding paperwork. Let us know if the comments if you have any other property-related tips.

LED Street Light Test Program

The SFPUC currently has a pilot test program underway to test replacing the current streetlights with LED street lights. I happened to notice them last night while having dinner at a new restaurant in the Inner Sunset. The picture below is not my best work, but it does show you the difference in color temperature between the older and newer lights.

LED lights at 9th and Irving in the Inner Sunset
LED lights at 9th and Irving in the Inner Sunset

In addition to the Inner Sunset test area, they are doing an additional pilot site in Presidio Heights, on Washington Street between Walnut Street and Maple Street.

If you have been in either area and noticed the lighting, SFPUC would very much like you to take their survey about what you thought. In my family, for example, I really liked the new LED lights but my husband thought that they weren’t as bright. However, we both preferred the color temperature of the LED lights.

The SFPUC seems pretty positive on them, in addition to the energy saving advantages of LED lighting the lights also sound like they have some other slick tricks up their light poles, including the ability to adjust the brightness of the light based on pedestrian and vehicular activity at certain times of day.

All of this is a precursor to the city-wide replacement of our approximately 18,500 street lights that currently use high pressure sodium light bulbs with the LED lights. The San Francisco Public Utilities Commission says that feedback from the two pilot sites will be used in tweaking the city-wide rollout. So if you have been in either of these areas, take a moment and complete the survey.

 

San Francisco’s Fog-Free Fall Days

Fall days in San Francisco are pretty much the best weather days in existence. A perfect fall day in San Francisco is sublime in a way that I’m not yet eloquent enough to put into words.

Yesterday was the Folsom Street Fair, this next weekend is the Castro Street Fair, and all throughout the city, people are basking in the glorious rays of that golden, glowing orb that is so often concealed behind a gray layer of fog. Yes, Karl the Fog, I’m looking at you!

San Francisco marine layer. Image source: NASA

San Francisco marine layer. Image source: NASA

Here’s a quick overview from the NASA Earth Observatory that explains the why San Francisco fog is so strong (and why our fall weather is so amazingly gorgeous):

Intrusions by the marine layer—and all of the accompanying fog and clouds—are routine in San Francisco during the summer. The intrusions are caused by westerly breezes that push cold air inland to replace the warm air rising off of California’s Central Valley. As it did on the day this image was taken, the marine layer often completely envelops the Golden Gate Bridge in a thick cloak of fog and clouds.

In San Francisco, fog is most common during the summer due to a combination of environmental conditions that cause wind patterns and ocean currents in the North Pacific to play off one another. One of the first steps involves the northward migration of the Pacific High, a high-pressure weather pattern that strengthens and moves toward the coast in the spring and summer. The high causes wind patterns to shift, which in turn affects the California Current, a major ocean current that flows from British Columbia south along the Pacific coast.

During the summer, the strengthening of the high pushes the California Current’s surface waters away from the shore. As this happens, deeper, colder water rises up to replace it, a process called upwelling. Upwelling causes water temperatures in the Pacific to be frigid, but biologically productive. When sea breezes blow over this cold water, water vapor is forced to condense out of the air, forming advection fog. A different type of fog—tule fog—forms in San Francisco during the winter due to a separate set of meteorological conditions.