Nondisclosure & Fraud  ·  August 15, 2026

The Seller Didn’t Disclose a Defect. What Are My Options in California?

The first heavy rain after you move in, a stain spreads across the ceiling. Or a contractor pulls off a section of drywall and finds a repair nobody mentioned. Or the city tells you the addition was never permitted. The question that follows is always the same: did the seller know, and what can I do about it?

Here is how California actually answers that — including the parts that work against buyers, which are worth knowing before you spend money on a lawsuit.

Start with what the seller was required to tell you

California sellers of residential property of one to four units — along with condominiums, units in planned developments, and stock cooperative units — must deliver a Real Estate Transfer Disclosure Statement under Civil Code section 1102 and the sections that follow. That obligation cannot be waived. Section 1102(c) states that any waiver of the article’s requirements is void as against public policy, which is why an “as is” clause does not get a seller out of it.

Two features of the statute favor buyers more than most people realize.

First, you do not have to prove the seller meant to defraud you. Civil Code section 1102.13 makes any person who willfully or negligently violates the disclosure article liable for the buyer’s actual damages. A seller who checked the wrong box carelessly is within the statute.

Second, a late disclosure gives you a termination right. Under section 1102.3, if a required disclosure or a material amendment to one arrives after your offer was executed, you have three days after personal delivery — five days if it came by mail or electronic record — to terminate in writing. A material amendment restarts that window. Buyers routinely fail to notice this in the middle of a transaction.

What section 1102.13 does not do is undo the sale. The statute expressly provides that no transfer is invalidated solely because of a failure to comply. It is a damages remedy.

The duty that survives even when the paperwork doesn't

This is the point that changes outcomes most often.

Civil Code section 1102.2 exempts a list of transfers from the statutory disclosure requirement: court-ordered sales, transfers by a lender in foreclosure and REO sales, many fiduciary transfers in the administration of a trust or estate, transfers between co-owners, transfers between spouses and certain relatives, and others. Buyers in those transactions are frequently told, correctly, that no Transfer Disclosure Statement was required.

That is not the end of the analysis. California’s common law duty to disclose known material facts is independent of the statute, and the statutory scheme does not displace it. A probate seller, a trustee, or a lender that actually knew about a defect and concealed it can still be liable.

The common law claim requires the buyer to prove the seller knew the fact, failed to disclose it, that the buyer neither knew nor could reasonably have discovered it, that the seller knew that, that the fact significantly affected the value or desirability of the property, and that the nondisclosure was a substantial factor in causing harm.

Silence, half-truths, and outright statements

California treats three different things as actionable deceit, and it matters which one you have:

• An affirmative false statement. A “No” next to a question about flooding or water damage, where the seller had two prior leaks, is a misrepresentation — not mere silence. This is the strongest posture, and it is why the TDS itself is usually the central document.
• Concealment. Civil Code section 1710(3) reaches the suppression of a fact by someone bound to disclose it. A duty arises where the seller had exclusive knowledge of a material fact, actively concealed it, or made partial representations while suppressing qualifying facts.
• The partial truth. “Roof repaired 2019” is a representation. Omitting that it leaked twice after the repair is a suppression of the fact that qualifies it. Courts treat that as concealment, and it is one of the most common patterns in these cases.

What about the agents?

Civil Code section 2079 requires a licensed broker or salesperson to conduct a reasonably competent and diligent visual inspection of residential property of one to four units and to disclose facts materially affecting value or desirability that such an inspection would reveal. The duty comes from Easton v. Strassburger (1984) 152 Cal.App.3d 90, where listing agents saw signs of prior earth movement and neither investigated nor warned the buyer.

But the Legislature that codified Easton also fenced it in. Section 2079.3 excludes areas that are reasonably and normally inaccessible, and does not require an agent to inspect off-site areas, public records, or permits. That is why “the agent should have pulled the permits” is generally not a winning theory. What survives is knowledge: an agent who actually learned a material fact has to disclose it, even if the fact is off-site (Ryan v. Real Estate of the Pacific, Inc. (2019) 32 Cal.App.5th 637).

How much time do you actually have?

Fraud and concealment claims run three years from discovery under Code of Civil Procedure section 338(d). Breach of a written contract runs four years under section 337. Claims against agents are capped at two years under Civil Code section 2079.4.

The trap is in the word “discovery.” California does not wait until a buyer knows for certain. Accrual begins when the buyer suspected or should have suspected that an injury was caused by wrongdoing.

Vera v. REL-BC, LLC (2021) 66 Cal.App.5th 57 is the case to know. A buyer purchased a flipped Oakland house; the sellers’ disclosures denied knowledge of water intrusion and unpermitted work. The buyer’s own pre-closing inspection reports flagged water intrusion contradicting those statements and a significant sewer problem. Escrow closed in December 2011. Suit was filed three years and three days later. The court held the buyer was on inquiry notice before closing — and applied the three-year fraud period to the breach-of-contract claim too, because the gravamen of the case was fraud. Summary judgment for the sellers was affirmed.

The practical takeaway: the clock can start at or before close of escrow, not when the defect finally becomes undeniable. Combined with the two-year cap on agent claims, the realistic outside window in many of these matters is two years from close of escrow.

What recovery looks like

Setting expectations accurately is more useful than a number.

Fraud damages against a seller are governed by Civil Code section 3343, which uses the out-of-pocket rule: the difference between the actual value of what you gave up and the actual value of what you received, plus amounts reasonably expended in reliance, loss of use and enjoyment, and related items. Section 3343(b) expressly forecloses benefit-of-the-bargain damages against a seller. Repair estimates are routinely used as evidence of diminished value, but the legal measure is the value differential, not the invoice.

Punitive damages are available under Civil Code section 3294, but only on a non-contract claim, only on clear and convincing evidence, and only for oppression, fraud, or malice. The statute’s definition of fraud — intentional concealment of a material fact known to the defendant — maps well onto deliberate seller concealment. Careless nondisclosure will not get there.

Rescission exists under Civil Code section 1689, and section 1692 allows consequential damages alongside it without duplicate recovery. In practice, unwinding a closed residential sale is hard, because the buyer generally has to be in a position to restore the property. Most matters resolve as damages claims.

The one thing to do before you file

The C.A.R. Residential Purchase Agreement conditions its prevailing-party attorney fee clause on first attempting mediation. In Lange v. Schilling (2008) 163 Cal.App.4th 1412, a plaintiff who filed suit without requesting mediation forfeited attorney fees entirely despite winning. The court rejected a substantial compliance defense and treated the requirement as an unambiguous condition precedent. The plaintiff had spent roughly $113,000 in fees to recover a $13,000 judgment.

Send a written mediation request before filing, keep proof of delivery, and preserve any refusal. It costs almost nothing and it protects the term that often determines whether the case is worth bringing at all.

A short checklist

1. Pull the building department file and permit history for the property.
2. Obtain the prior MLS listing, including photographs and remarks.
3. Collect every disclosure document — TDS, natural hazard statement, seller questionnaire, advisories — and note the delivery dates.
4. Preserve your own inspection reports from before closing. They cut both ways, and a lawyer needs to see them early.
5. Photograph and document the condition now, before repairs.
6. Identify your close of escrow and occupancy dates. Those anchor every deadline.
7. Send a written mediation request before any filing.

If you are working through a nondisclosure problem in California, our seller nondisclosure practice page goes deeper on the statutes, and a free consultation is usually enough to tell whether the documents support a claim.

Common questions