Home Seller Didn’t Disclose Defects in Santa Cruz: What Buyers Can Do

James Eschen | Sep 01 2025 20:00

Discovering hidden problems after closing-mold behind a freshly painted wall, a leaky roof that only shows in foggy seasons, or an unpermitted addition-can turn your new Santa Cruz home into a source of stress. Our firm helps buyers across Santa Cruz and Monterey counties evaluate their options, build a strong claim, and pursue practical solutions-often starting with negotiation or mediation, and litigating when necessary.

 

What "Failure to Disclose" Means in California

 

California law requires residential sellers to disclose known, material facts that affect a property's value or desirability. In most sales, sellers complete a Transfer Disclosure Statement (TDS) and often a Seller Property Questionnaire (SPQ). Agents must also perform a visual inspection and disclose red flags.


Key points:

 

  • "As-is" sales do not excuse non-disclosure of known defects.
  • "Material" means a reasonable buyer would care about it (e.g., chronic leaks, foundation movement, unpermitted work).
  • Buyers typically receive other reports (e.g., Natural Hazard Disclosure, inspections) that can support a claim.

 

 

Why This Issue Matters to Buyers

 

Financial impact: Repair costs, diminished property value, temporary lodging, and ongoing maintenance.
Legal risk: Strict timelines apply to claims; contracts usually require mediation before suing.
Personal toll: Health concerns from moisture/mold, disruption to work/school, and strain on savings-especially common with older coastal homes or hillside properties around San Lorenzo Valley, Aptos, and Scotts Valley.

 

 

Step-by-Step: What To Do If You Find Hidden Defects

 

  • Pause and gather your paperwork
    Locate your purchase agreement (often a C.A.R. form), TDS/SPQ, inspection reports, agent emails/texts, and seller representations.
  • Document everything
    • Photograph and video the issue (date-stamped).
    • Keep damaged materials (e.g., cut-out drywall with visible mold).
    • Save contractor bids and expert opinions.
  • Preserve the scene before major repairs
    Make emergency fixes to prevent further damage, but don't erase evidence before it's documented. Keep receipts.
  • Check your contract for dispute steps
    Many Santa Cruz transactions require mediation first. A failure to mediate can affect attorney's fees later.
  • Notify the seller and your agents in writing
    Be factual and professional. Identify the problem and request a discussion of options (repairs, credit, reimbursement).
  • Consider insurance and warranties
    Home warranties may cover limited items; homeowners insurance can help with sudden damage (not pre-existing defects), but your disclosure claim is typically against the seller (and sometimes brokers/inspectors).
  • Assess timing
    California statutes can be short (often 2-4 years, sometimes running from discovery). Don't let deadlines lapse.
  • Talk to a local real estate attorney
    Get a candid assessment of your claim strength, potential remedies (rescission, damages), and the best procedural path.

 

 

Common Scenarios We See in Santa Cruz County

 

  • Water Intrusion & Mold
    Foggy coastal microclimates and older beach cottages (Westside, Seabright, Pleasure Point) can hide chronic leaks or rot that sellers knew about.
  • Foundation/Soils Movement
    Hillside homes (Felton, Ben Lomond, Boulder Creek) can experience settlement or slide history that wasn't disclosed.
  • Unpermitted Additions or Garage Conversions
    ADUs or conversions without permits, complicating insurance, financing, and resale.
  • Roof/Window Failures
    Salt air and wind can accelerate wear; spot repairs may have masked long-term issues.
  • Septic/Well Problems (Rural Parcels)
    In parts of Soquel and San Lorenzo Valley, failing systems or inadequate wells may surface post-closing.
  • Pest Damage
    Termite evidence concealed by patchwork or fresh paint.

 

 

Typical Buyer Challenges (and How to Navigate Them)

 

  • "As-Is" Confusion
    "As-is" doesn't trump the duty to disclose known defects. Focus on what the seller knew and failed to share.
  • Proving Knowledge
    We look for prior repair invoices, repeat contractor visits, disclosure inconsistencies, emails/texts, and agent notes.
  • Post-Closing Fatigue
    Buyers start repairs and lose leverage. Document first; sequence repairs with your legal strategy.
  • Mediation vs. Litigation
    Many contracts reward early mediation. A well-supported demand can resolve the dispute before suit.
  • Statute of Limitations
    Deadlines vary by claim (fraud, negligent misrepresentation, contract). Early legal review protects your rights.

 

 

Your Legal Options: Remedies & Process

 

  • Rescission (Unwind the Sale)
    Rare but possible for major, intentional nondisclosures-return the property and recover your funds.
  • Damages
    • Cost of repair (plus related expenses).
    • Diminution in value if the property remains worth less even after repair.
    • Consequential losses (temporary housing, damaged personal items).
    • Punitive damages for intentional fraud (case-dependent).
  • Claims Against Others
    Depending on facts, potential claims may include the seller, listing/selling brokers (for inspection/disclosure duties), or inspectors (if reports were deficient).
  • Process Snapshot
  • Evidence review and valuation; 2) Demand letter with exhibits; 3) Mediation per contract; 4) Filing suit if needed; 5) Expert inspections, depositions; 6) Settlement or trial.

 

 

Practical Examples

 

  • Undisclosed Chronic Leak
    Seller patched ceiling before showings. After first winter, water stains reappear. Past invoices reveal repeated leak calls. Remedy: repair costs, possible diminution, fees per contract.
  • Unpermitted ADU
    Buyer learns "in-law unit" lacks permits; rent is prohibited until legalized. Remedy: legalization costs or damages for reduced value.
  • Septic Failure
    Inspection missed system age and capacity. Prior service records show chronic issues. Remedy: system replacement cost and related housing expense.

 

 

(Results depend on evidence and contract terms; these examples illustrate paths, not promises.)

 

How Our Firm Helps-and Why Early Support Matters

 

  • Case Triage & Strategy
    We analyze disclosures, reports, agent notes, and digital communications to assess claim strength and value.
  • Expert Teaming
    We coordinate with contractors, inspectors, and environmental specialists to quantify repair scope and cost.
  • Negotiation & Mediation
    A comprehensive demand package often drives resolution before suit-especially effective under C.A.R. mediation clauses.
  • Litigation When Necessary
    If negotiations stall, we file and prosecute your claim with a clear damages model and persuasive evidence.
  • Local Knowledge
    Familiarity with Santa Cruz County building practices, common neighborhood issues, and regional courts helps us prioritize the right arguments.
  • Clear Communication (Se habla español)
    We explain options in plain language and keep you informed at every step.

 

 

What's the Next Step?

 

If you suspect the seller failed to disclose a defect, timing and documentation are critical. Let us review your contract and evidence and outline your best path forward-whether that's negotiation, mediation, or litigation.

 

Contact the Law Office of James C. Eschen to schedule a consultation. This article provides general information, not legal advice; your facts matter.

 

 

Local Closing

 

We represent homebuyers throughout Santa Cruz County and the Monterey Bay Area, including Santa Cruz, Capitola, Soquel, Aptos, Watsonville, Scotts Valley, Felton, Ben Lomond, Boulder Creek, Monterey, Salinas, and Carmel. Wherever you purchased-from the Westside to the San Lorenzo Valley-we're here to help you protect your investment and move on with confidence.