Seller non-disclosure, agent misconduct, and deposit disputes in California

Jimmy Nguyen is a California real estate attorney (State Bar #282045) and a licensed real estate broker (DRE 01496817) practicing from San Jose. He represents home buyers and property owners in the disputes that come out of a residential purchase: a seller who hid a defect, an agent who did not protect the client, a deposit that nobody will release, or a contract going wrong while escrow is still open. He has worked inside the brokerage side of the industry since 2005, so he reads the listing file, the disclosures and the agent’s conduct the way the people across the table do.

Is this your situation?

• You bought a home and found something the seller must have known about. Water intrusion, a foundation problem, unpermitted work, a death on the property, a neighbor dispute — and it is not on the TDS or the SPQ.
• Your own agent let you down. A skipped visual inspection, a material fact papered over, a dual-agency conflict, pressure to remove a contingency so a commission could close.
• Your earnest money deposit is stuck. The other side will not sign the release, or the seller is claiming the whole deposit as liquidated damages. Earnest money and deposit disputes in detail.
• You are still in escrow and the deal is going wrong. Contingency deadlines, a seller who will not perform, a repair credit dispute. This is the moment advice is worth the most and the one most people wait too long to ask for.

If one of those is you, write to Jimmy before you sign anything or accept any settlement. A few sentences is enough to start. If you are just now discovering a defect, read what to do in the first 72 hours first.

Did the seller fail to disclose a defect?

Residential sellers in California must disclose any material defect they know about — anything that would affect the value of the home or a reasonable buyer’s decision to purchase it. The seller answers on the Transfer Disclosure Statement (TDS) under Civil Code § 1102 and, in most C.A.R. transactions, on the Seller Property Questionnaire (SPQ). An agent advising a seller should say: if there is the slightest chance something is an issue, disclose it. If you discovered water damage, foundation problems, unpermitted work, or any other defect the seller knew about and left off those forms, you may be entitled to the cost of repairs, the difference in value, and other damages under Civil Code § 3343.

Did your real estate agent fail to protect you?

An agent owes the buyer a duty of reasonable care and, when representing the buyer, a fiduciary duty of loyalty. Every agent in a residential sale must also conduct a reasonably competent visual inspection and report what it revealed on the Agent Visual Inspection Disclosure (AVID) under Civil Code § 2079. Agents who skip that inspection, paper over problems, steer a client toward a closing to earn a commission, or work both sides without proper disclosure can be held liable for the harm they cause. Suing your own real estate agent explains what that claim looks like.

Is someone wrongfully holding your earnest money deposit?

When a buyer or seller is entitled to the deposit under the purchase agreement, the other side must release it. A party who refuses in bad faith is exposed under Civil Code § 1057.3 to a statutory penalty on top of the deposit, plus attorney fees. Where the seller claims the deposit as liquidated damages, Civil Code § 1675 caps what the seller may keep on a residence at 3% of the price, and only if the clause was separately initialed. The earnest money page covers the written demand, the cap, and what escrow can and cannot do.

Deadlines are the reason to write early

These claims run on clocks that start before most people realize anything is wrong. Claims against the agent or broker for a failure in the visual inspection run two years from close of escrow under Civil Code § 2079.4, and that clock does not wait for you to discover the problem. Fraud claims run three years from discovery and written-contract claims four years, but the evidence that proves them — listing photos, prior MLS records, permit history, the agent’s own file — gets harder to obtain every month. The purchase agreement also requires mediation before suit, and a party who refuses a proper mediation request can forfeit the right to recover attorney fees even after winning. More on the mediation requirement.

Legal Basis

These residential claims are grounded in the following California authorities:

• Civil Code § 1102 et seq. — requires residential sellers to complete and deliver a Transfer Disclosure Statement (TDS) disclosing known material defects.
• Civil Code § 2079 — imposes a duty on real estate brokers to conduct a reasonably competent visual inspection and disclose material facts affecting value or desirability (AVID); § 2079.4 sets the two-year limitation period for that claim.
• Civil Code § 1057.3 — requires prompt release of an earnest money deposit once a party is entitled to it, with a penalty for bad-faith refusal.
• Civil Code §§ 1675–1677 — cap and formal requirements for liquidated-damages clauses in residential purchase contracts.
• Civil Code § 3343 — sets the measure of damages available to a defrauded buyer of real property, including out-of-pocket loss and consequential damages.
• Lingsch v. Savage (1963) 213 Cal.App.2d 729 — holds that a seller or broker who knows of facts materially affecting the value or desirability of the property must disclose them, independent of statute.

What happens after you write

Jimmy reads every submission himself and replies personally, usually within one business day. If it is a matter he can help with, the next step is a complimentary phone consultation to understand the facts, tell you whether there is a claim and which deadline governs it, and what he would do first. If you decide to go further, he quotes a fee for the specific work you have agreed on — depending on the matter, a flat fee, an advance retainer, an hourly arrangement, or in some cases a contingency fee paid from a recovery. You will have the scope and the fee arrangement in writing before anything begins.

Attorney and broker in one

Jimmy sees a real estate dispute from two sides at once. He has been licensed in California real estate since 2005 and has practiced law since 2013, which means that when a seller hides a defect or an agent gives bad advice, he understands both the law being broken and the ordinary industry practice it departed from — what an agent should have put in the AVID, what a reasonable listing file looks like, what the disclosure packet should have contained. The same combination is why buyers who are not in a dispute at all hire him as their broker on a purchase: see buyer representation by a real estate attorney. Jimmy is licensed to practice law only in California; his Nevada credential is a real estate broker license, not a law license.

For where these cases are filed and heard locally, see San Jose Real Estate Attorney — Santa Clara County and Los Angeles Real Estate Attorney — LA & Orange County. For related matters, see Commercial Real Estate and the Real Estate Law FAQ. For more on this topic, read Seller Didn’t Disclose a Defect? What California Home Buyers Can Do, 5 Signs Your Home Seller Lied on the Disclosure Form, or How Much Is My Nondisclosure Case Worth? on the blog.

On the disclosure forms themselves and the defects that most often go undisclosed, see Understanding California’s TDS and SPQ: What Sellers Must Tell You, Water Intrusion, Mold, and Foundation Issues, and Unpermitted Additions and Conversions: What Buyers Need to Know.

What should you do next?

These claims have deadlines, and evidence disappears fast. If you believe you were cheated in a home purchase anywhere in California, write to Jimmy before you sign anything or accept any settlement — a few sentences about what happened is enough to start.

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