San Francisco Buyers’ Guide: Legal Options When a Seller Fails to Disclose Property Defects

Buying a home in San Francisco is exciting—but it can also be stressful, especially when unexpected problems surface after closing. One of the most frustrating situations is discovering defects in a property that the seller failed to disclose.

Whether it’s a leaky roof, faulty plumbing, or structural issues, buyers are often left wondering what they can do legally. Fortunately, California real estate law provides several avenues to address undisclosed property defects. In a previous blog, we broke down common post-purchase problems. Let’s now break down your options, so you can take informed, decisive action.

1. Review Your Purchase Agreement and Disclosure Documents

The first step is to carefully revisit the purchase contract you signed, as well as the disclosure documents. The standard San Francisco Association of Realtors (SFAR) purchase agreement includes clauses about disclosures, warranties, and remedies in case defects are discovered.

Don’t forget to:

1. Check the Transfer Disclosure Statement and Seller Property Questionnaire. California law requires sellers to provide a Real Estate Transfer Disclosure Statement (TDS), outlining known defects and material facts. The California Association of Realtors (CAR) Seller Property Questionnaire (SPQ) is another form commonly provided by the seller that discloses information about the property. 
2. Check the Agent Visual Inspection Disclosures (AVID) form. California law requires real estate agents representing both sides of the transaction to walk through the property and identify defects. 
3. Take note of your remedies. The SFAR purchase agreement, like the CAR agreement, provides for disputes to be mediated before they are arbitrated. Attorney's fees are recoverable by the prevailing party in the form agreement.

Actionable tip: Gather all paperwork, including inspection reports, emails with the seller or real estate agent, and any repair estimates. This documentation is critical if legal action becomes necessary. Also, depending on the circumstances, it might be worthwhile asking neighbors what they know. If there are foundation issues, a neighbor might recall if there was a foundation contractor at the property prior to the sale, for example.

2. Attempt Direct Resolution with the Seller

If the matter is small, say under $25,000, the simplest solution is to communicate directly. A polite but firm approach can yield repairs, compensation, or a partial refund.

We recommend:

• Sending a written notice: Clearly describe the defect, attach evidence (photos, inspection reports), and request a specific remedy.
• Setting a reasonable deadline: Indicate a timeframe for the seller to respond or take corrective action.
• If you are getting nowhere fast, demand mediation. Your real estate agent can help you here by using the CAR form for this.

Actionable tip: Keep a paper trail. Even if the seller ultimately refuses to cooperate, this written record will help your case if you escalate to legal channels.

3. Pursue Mediation/Through an Attorney

If the losses are more significant, you will want to hire an attorney to evaluate your breach of contract and fraud claims.

With the help of an attorney, identify:

• A basis for the claim. The seller’s omission of material facts constitutes a violation of the contract terms.
• Potential remedies. You could recover repair costs, compensation for diminished property value, or even rescind the sale in some cases.

Actionable tip: Engage a real estate attorney early. They can assess whether your situation meets the legal threshold for a breach-of-contract claim and guide you on the best strategy.

4. Educate Yourself on Mediation and Arbitration

On the SFAR and CAR form, real estate contracts include clauses requiring disputes to go through mediation or arbitration before filing a lawsuit.

Here is how the two processes differ.

• Mediation: A neutral mediator helps both parties reach a voluntary resolution without court involvement.
• Arbitration: A neutral arbitrator hears both sides and issues a binding decision.

Actionable tip: In the unlikely event that your contract doesn’t require it, voluntary mediation can save time, reduce costs, and preserve relationships compared to formal litigation.

5. Consider Arbitration as a Last Resort

If other options fail, filing a demand in arbitration or a lawsuit in court may be necessary. Litigation can address serious undisclosed defects and allows you to seek full compensation. An experienced law firm can help you document and account for the multiple types of damages: Repair costs, diminished value, and related expenses. They can also help you present your case by gathering strong documentation, inspection reports, and clear evidence of the seller’s knowledge.

Actionable tip: Retain an experienced real estate litigation attorney to guide you through the process. They can handle discovery, negotiations, and courtroom strategy to maximize your chances of success.

6. Know Your Time Limits

California has statutes of limitations for real estate claims. Acting promptly is critical.

Important statute of limitations include:

• For breach of contract, claims are generally valid for 4 years from the date of discovery.
• For fraud/misrepresentation, claims are usually valid for 3 years from the date of discovery.

Actionable tip: Even if you are unsure about pursuing legal action, consult a lawyer quickly to protect your rights and avoid missing deadlines.

Working with Experienced Attorneys

Navigating undisclosed property defects can feel overwhelming, but you don’t have to face it alone. At Wood Litigation, APC, our real estate attorneys help buyers understand their rights and evaluate the best course of action.

Principal Greg Wood brings over 25 years of litigation experience, regularly assisting clients in high-value real estate disputes. From negotiation and mediation to arbitration and court proceedings, our team provides thorough, practical guidance while advocating for a favorable outcome.

Whether you’re dealing with minor defects or major undisclosed problems, taking timely action and consulting a knowledgeable attorney can often make a significant difference.

Don’t wait to pursue legal action. Contact Wood Litigation, APC at (415) 936-0300 today or contact us online for a consultation and personalized guidance on the best steps forward.