You just moved into your new home, and now you’re finding problems the seller never mentioned — a leaky roof, a cracked foundation, an addition that was never permitted. You’re not imagining it, and you’re not out of options.
Sellers in California have a legal duty to disclose
Under California law, sellers of residential real property must disclose known material facts that affect the value or desirability of the home. This isn’t just a courtesy — it’s a legal obligation set out in the Transfer Disclosure Statement (TDS) and Seller Property Questionnaire (SPQ), and reinforced by case law going back to Lingsch v. Savage (1963) 213 Cal.App.2d 729, which held that sellers and their agents must disclose facts they know that a buyer couldn’t reasonably discover on their own.
A “material fact” is anything that would affect what a reasonable buyer is willing to pay, or whether they’d buy the house at all. Prior water damage, an unpermitted room addition, foundation settling, mold, a leaking roof that was “fixed” without a permit — these are the kinds of things sellers are supposed to tell you about.
What counts as a violation
You may have a claim if:
- The seller knew about a defect and didn’t disclose it on the TDS or SPQ
- The seller actively covered up or minimized a known problem
- Your real estate agent knew, or should have known, and stayed silent
- The seller made a false statement about the property’s condition, in writing or verbally
It doesn’t matter if the seller says “I didn’t know” — if there’s evidence they should have known (prior repair invoices, permit records, neighbor statements, prior disclosure history), that can still support a claim.
An “as-is” clause in your purchase agreement does not change this. California courts have squarely rejected the idea that selling a home “as-is” excuses a seller from disclosing known defects: in Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534, the court held that where a seller actively misrepresents or fails to disclose the true condition of the property, an as-is provision is ineffective to relieve the seller of liability. If your agent or the seller told you the as-is language means you have no recourse, that is not correct.
One important nuance: the duty is to disclose the material fact itself, not necessarily every possible downstream consequence of it. In Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, the court held that a seller who disclosed the existence of a known issue — there, pending construction defect litigation — had satisfied the disclosure duty, even without spelling out every way that issue might affect the property’s value going forward. In other words, if the seller told you something was wrong and you didn’t ask further questions or investigate, that can cut against a nondisclosure claim. But if the seller said nothing at all, or actively minimized what they knew, that is a very different case — and the kind of case this page is about.
What you can recover
California uses the “out-of-pocket” measure of damages for real estate fraud under Civil Code section 3343(a). In plain terms: you can recover the difference between what you paid and what the property was actually worth given the undisclosed defect, plus reasonable costs you incurred because of it — repair costs, and in some cases loss of use of the property. If the seller’s conduct was intentional or especially deceptive, punitive damages may also be available under Civil Code section 3294.
What to do right now
- Don’t start repairs yet — document the defect first with photos and, ideally, a contractor or inspector report before any work begins.
- Pull your disclosure documents — the TDS, SPQ, and Real Estate Purchase Agreement. Compare what was disclosed against what you’re now finding.
- Look for a paper trail — permit records with the county, prior listing history, neighbor accounts, anything suggesting the seller knew.
- Don’t wait too long — fraud claims in California generally must be filed within three years of when you discovered, or reasonably should have discovered, the problem. The clock can start running sooner than you think, so talk to an attorney as soon as you suspect something was hidden from you.
How Jimmy can help
Jimmy Nguyen is a California real estate attorney, licensed real estate broker, and CAR-panel mediator who has spent over a decade in the real estate industry — he knows both sides of the transaction. If you believe a seller or agent hid something from you, reach out for a free case evaluation.
Call 408.645.0606 or email jimmy@lawjn.com.