Real Estate Disclosures Explained: TDS, Easton & Fair Housing (CA Exam 2026)

Disclosure is the biggest, most tested part of the California Real Estate exam. Learn a handful of rules and these turn into free points. Let's go. The practice of real estate and disclosures is about 25% of the exam, the single largest area.

So this is worth your time. Start with the transfer disclosure statement. The TDS, it's the seller's written disclosure of the property's condition. And it's required when selling a one to four unit home.

In short, the seller tells the buyer what's wrong with the house. But there's a big exception the exam loves. A home sold at a foreclosure, a trustee's sale, does it need a TDS? Let's rule out the options.

Always required with no exceptions, no exceptions exist. Exempt because it's a trustee or foreclosure sale? Yes, that's the one. Exempt because it has more than two units?

No, the unit count isn't the reason. Required only if the buyer asks? No, the rule foreclosure and trustee sales are exempt from the TDS. Next, the broker's own duty.

Under the Eastern case, on a one to four unit home, the listing broker must personally make a reasonably competent and diligent visual inspection of the accessible areas and disclose what they find. The agent has to look and tell. So picture this. An agent walks past an obvious water stain on the ceiling and never mentions it.

That's a breach of the broker's inspection duty, even if the seller stayed silent because the duty is the broker's own. There's also agency disclosure telling the parties who you represent. California does it in three steps in order. Disclose, then elect, then confirm.

Now a scenario, you're a disclosed dual agent and the seller quietly tells you she'll take far less than asking. Can you tell the buyer? Tell them since you represent the buyer too? No, keep it confidential because a dual agent may never reveal either side's bottom line.

Yes, reveal it only if the buyer asks. No, use it to earn a bigger commission, definitely not. The rule, a dual agent never reveals a party's bottom line price. Finally, fair housing.

Three illegal practices show up constantly. Steering is pushing buyers toward or away from areas by a protected class. Redlining is denying loans based on the neighborhood and blockbusting is scaring owners into selling. So which is this?

An agent tells homeowners that minority families are moving in and they should sell now before values drop. Steering, no, that's directing buyers. Redlining, no, that's lending. Blockbusting, also called panic peddling.

Yes, puffing, no, that's legal sales talk. The rule, scaring owners into selling with protected class claims is blockbusting. So four rules to keep. The TDS is required on one to four unit homes but exempt at a foreclosure.

Easton means the broker must inspect and disclose. Agency disclosure is disclose, elect, confirm. And a dual agent never reveals a bottom line. Now test yourself.

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