Before you write an offer, the seller hands you a disclosure package — and too many buyers skim it, sign the receipt, and move on. That's where money gets lost. The package is everything the seller legally has to tell you about the property, and it's the basis for deciding whether to buy, what to pay, and which contingencies you shouldn't waive. Here's what's inside, what to read first, and which findings should stop you in your tracks.
What's in a California disclosure package
California law requires sellers to disclose known material facts in writing. In Silicon Valley, a typical package includes:
- TDS (Transfer Disclosure Statement) — the seller's item-by-item statement on the home's systems, defects, and neighborhood issues. The core document.
- SPQ (Seller Property Questionnaire) — a more detailed questionnaire: past leaks, repairs, deaths on the property, neighbor disputes, and more.
- NHD (Natural Hazard Disclosure) — whether the home sits in a flood zone, earthquake fault zone, high fire-risk area, or similar, which affects both insurance and safety.
- Home inspection and pest (termite) reports — third-party findings, often commissioned by the seller in advance and included in the package.
- Preliminary title report (prelim) — liens, easements, and title issues that could limit how you use or improve the property.
- HOA documents (for condos and townhouses) — dues, reserves, rental restrictions, litigation, and balcony-safety (SB 326) inspection materials.
A practical reading order
Start with the flagged items in the pest and home inspection reports. This is real money: remaining roof life, foundation cracks, drainage problems, aging HVAC and plumbing — these decide what you'll spend in your first year. And don't skip any line that says "further evaluation recommended." That's inspector language for "I found something I can't fully judge," and it's where expensive surprises hide.
Next, cross-check the TDS and SPQ against the inspections. If the SPQ says "never any leaks" but the inspection shows water staining or mold under carpet, the contradiction itself is the signal. The opposite pattern matters too: an SPQ full of "Unknown" answers is common with investment and estate properties — not necessarily a problem, but it means you must rely on inspections, not the seller's word.
Then read the NHD and the prelim. Flood-zone status determines whether you'll need separate flood insurance; liquefaction zones change your earthquake risk picture. An easement running through the backyard can restrict a future addition you were counting on.
Condos and townhouses: the HOA layer
With a condo or townhouse, the HOA documents matter as much as the unit itself:
- Reserves. Thin reserves mean special assessments are likely — thousands of dollars at a time, with little warning.
- Litigation. An HOA in active litigation can complicate or block financing; some lenders won't lend in the project at all.
- Rental restrictions. If you may rent the home out later, check rental caps and minimum ownership periods before you buy, not after.
- SB 326 balcony inspections. California law requires HOAs to inspect balconies and other exterior elevated elements. If the inspection found water intrusion or structural issues and repairs aren't complete, some lenders will deem the project ineligible under Fannie Mae guidelines and decline the loan. This is a real, current reason condo purchases fall apart — confirm the report is in the package and ask whether the repairs are done.
Red flags worth a pause
None of these is an automatic walk-away, but each one should trigger questions before you commit:
- Foundation issues described as "settled" with no engineer's report behind it;
- A roof near end-of-life in the inspection, while the asking price assumes a new one;
- Additions with no permits on record — a future resale, insurance, and appraisal problem;
- "Further evaluation" recommended on three or four major systems at once (roof, foundation, drainage, structure);
- HOA packages missing the last 12 months of board minutes, or missing the SB 326 report entirely.
How disclosures should shape your offer
Once you've read the package, your offer should change accordingly: price in the repairs you can estimate; for risks you can't quantify, either keep the relevant contingency or ask for supplemental documents before deciding. In competitive Silicon Valley situations, waiving everything is sometimes necessary — but it should be a conscious trade, made with the disclosure findings in front of you. The package exists so you waive with your eyes open.
The bottom line
A disclosure package is a home's medical chart. If you don't have time to read every page, or you're unsure how serious a finding is, that's exactly what a buyer's agent is for — bring the package to me and we'll go through it together.
For this week's prices across 38 Silicon Valley market zones, see my weekly market update. Looking at a specific home? Send me a message.
Kevin Tao | Coldwell Banker Realty | DRE #02225649
(This article is general education, not legal or investment advice. For a specific transaction, consult your agent and attorney.)