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California Real Estate Regulations: What Buyers and Sellers Need To Know

California, being the most popular and dynamic state of the US, with a unique set of geographies ranging from inland areas to coastal ones, has the most dynamic real estate market across the US.

With specific real estate laws that both buyers and sellers should be aware of while engaging in real estate transactions. We here will talk about some key aspects that buyers and sellers both should know before making a deal.

What do Buyers need to know about California Real Estate Regulations?

  • Agency Relationships

There exist some types of relationships in the real estate market that the agencies make with the dealer. For example, a dual agency relationship is something where only one agency brings the buyer, as well as the seller together. The other type of relationship is where the buyer and seller would both transact through their unique agencies.

What buyers need to know here significantly is, that if you choose the separate agencies then there is no peculiarity in it. But, if you choose the dual agency, then Californian Real Estate Laws bind both parties to give informed written consent separately for this dual agency agreement.

  • Disclosure of the Property Facts

It is a common regulation in many states of the US, that Sellers are required to provide buyers with various disclosures about what the property is lacking. 

Property facts-Rezopropertymanagement

As a real estate buyer in California, one should avoid making a deal that doesn’t provide the TDS and SPQ related to the property. 

What are TDS and SPQ in the Real Estate Market?

In California, as per the real estate laws, it is called the Transfer Disclosure Statement (TDS) and the Seller Property Questionnaire (SPQ) and usually consists of issues related to material defects.

  • Inspections

In California, real estate regulations say, ‘Buyers have the right to conduct various inspections on the property’. Some common inspections include home inspections,  termite inspections, and possibly others, depending on the type of the property.

  • Contracts and Agreements

The purchase agreement is a significant document for a buyer in a real estate transaction. One should carefully review and understand the terms of the contract, including contingencies, timelines, and the deposit amount. This particular thing is not specifical but a common aspect for any state in the US, as far as real estate deal is concerned.

  • Financing & Fair Housing Laws

Buyers in California need to secure financing for the purchase by understanding the terms of the loan, interest rates, and potential costs associated with the mortgage. There is a closing cost, which we have already discussed in a separate article with its breakdown and other relevant details.

Financing & Fair Housing Laws-Rezopropertmanagement

As far as fair housing laws are concerned, in California, the buyers are required to be aware of fair housing laws such as race, color, religion, etc., and must review the fairness of the deal before making the transaction.

What do Sellers need to know about California Real Estate Regulations?

  • Disclosures

It is the same thing for Sellers as it was for buyers. But only different in terms of it becoming a responsibility for a seller to provide it now, whereas for a buyer it was a kind of reservation or a legal thing that one can ask for.

Being a seller, you are required to provide buyers with various disclosures as per California real estate laws including the Transfer Disclosure Statement (TDS) and the Seller Property Questionnaire (SPQ). 

A buyer has all the right to ask for these, and if not provided, one can also choose to step back from the deal for the fact you hiding the property deficiencies.

  • Marketing and Advertising

Sellers and their agents should adhere to the fair housing laws, especially in their marketing and advertising efforts. Found discrimination in advertising based on protected characteristics is punishable in California.

  • Listing Agreement

As per the real estate laws of California, sellers have to get an agreement if they choose to list their property on a popular property management website or property listing website. They need to do so to outline the terms and conditions of the agent’s representation. However, these steps can be shortened by hiring a professional real estate management agent from Rezo or any other property management company in CaliforniaSellers shall keep the duration of the agreement in mind also.

  • Property Showing & Negotiation

A Seller in California should be ready to showcase the property to the interested buyer. The showings would include keeping the home in good condition and making it accessible to potential buyers and their agents for a physical round to satisfy them.

As far as negotiations are concerned, the sellers should be prepared for considering offers, and potential counteroffers. To understand the contingencies outlined in the purchase agreement is a crucial aspect for the seller first, even prior to the buyer.

  • Closing Process

Sellers should also understand the closing process likewise the buyer while including the timeline and potential closing costs. Hiring a professional real estate agent from a property management company or an escrow company helps review the closing disclosure and ensures a smooth closing process.

  • Title and Escrow

When it comes to the title cost for sellers, real estate laws suggest to emphasis on understanding the roles of the third party and reviewing the relevant documents. If a seller works with a title company and an escrow company to facilitate the closing process, there are certain cases that can be applicable and are necessary to be reviewed if applicable only.

For example, ‘1031 Exchange’.

This exchange is usually used for tax purposes. One should be aware of the specific rules and timelines associated with this process.

What is 1031 Exchange?

It is a type of exchange in which two properties under section 1031 of the US Internal Revenue Code get swapped as one for another followed by the capital gains to be deferred later on, only if the revenue and real estate rules are applicable.

While making a deal in the real estate industry, it is wise for the buyer and seller both to work with experienced real estate professionals who can guide them through the complex process and ensure compliance with California’s real estate regulations, because as a result, they both get benefits. 

However, staying informed about real estate laws and seeking legal advice when necessary is advisable, for which, there are property management consultants who would be happy to help you 24/7 with all the real estate solutions.


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