The Seller Never Delivered a Disclosure Statement. Can You Walk Away From the Deal?

Escrow was supposed to close on a Thursday. It did not. Your lender wanted one more report, the seller refused to extend, and somewhere in the file you notice something else: in two years of addenda, the seller never delivered a Transfer Disclosure Statement. Not late. Never. For twenty years California buyers have been told that this alone excuses them from closing, which would mean the deal is still alive and the seller is the one in breach. In August 2026 the First District told a buyer in almost exactly that position that he was wrong, and affirmed a judgment against him.

The rule buyers have relied on since 2003

California's Transfer Disclosure Law, Civil Code section 1102 and following, requires a seller to give the buyer a completed Transfer Disclosure Statement, the TDS, describing the condition of the property. Section 1102, subdivision (c), makes any waiver of the article void as against public policy, which is unusually strong language for a disclosure statute.

Two published decisions built the rule most agents and buyers know.

In Realmuto v. Gagnard (2003) 110 Cal.App.4th 193, the Fourth District held that delivery of the TDS is a condition precedent to the buyer's duty to perform, and that the condition cannot be waived. The buyers there were investors who intended to demolish the house and had no interest whatsoever in its condition. It did not matter. The seller sued for specific performance, lost on summary judgment, and lost again on appeal. The court also held that the damages remedy in section 1102.13 reaches only completed transfers, so a seller whose sale falls apart cannot fall back on it.

Richman v. Hartley (2014) 224 Cal.App.4th 1182 extended that to mixed use property. The parcel held a commercial building and a residential duplex. The seller argued the statute was for homes. The Second District disagreed, reading the statutory scope to turn on dwelling units rather than on the label anyone puts on the parcel: "If a property is 'improved with or consist[s] of' one to four dwelling units, it is subject to the Transfer Disclosure Law, regardless of whether it may also have a commercial use." Because the seller delivered no TDS, the buyer had no duty to close as a matter of law and won summary judgment.

Read together, those cases produced a clean piece of practical advice. No disclosure statement, no obligation to close.

What the First District decided in August 2026

Nasey v. Fell Holdings, LLC (Aug. 10, 2026, A174623) is published, and it complicates that advice considerably.

Laurence Nasey had operated automotive businesses out of two mixed use San Francisco properties for roughly thirty years, with residential units above. He lost them in a nonjudicial foreclosure in March 2020. Fell Holdings bought at the sale. In September 2020 Fell agreed to let Nasey buy them back for $10.5 million, all cash, with an original closing date of May 31, 2021 that a series of addenda pushed out to September 29, 2022. The agreement obligated the seller to deliver disclosures within seven days and gave the buyer a right to cancel if the seller did not. The addenda said the sale was as is and that no disclosures were required.

When Nasey's lender asked for Phase II environmental testing, Fell refused to permit it and refused to extend again. Escrow never closed. Fell never delivered a TDS. Nasey went to court.

The Court of Appeal affirmed judgment against him. Assuming without deciding that the statutory disclosures were even required, the court held that this contract and these addenda did not make TDS delivery a condition precedent to Nasey's obligation to perform. The two duties were concurrent covenants, and the seller's failure on one did not excuse the buyer's failure on the other.

The distinction that decides which side of this you are on

The reasoning matters more than the result, and it is easy to miss.

In Realmuto and Richman, the seller sued the buyer. Each buyer had refused to close and was using the missing disclosure statement defensively, as a reason it owed nothing. Both won.

In Nasey, the buyer was the one who did not perform, and he was using the missing disclosure statement offensively, to excuse his own failure to close and keep an expired deal open. The court declined to let the statute work that way. It reasoned that treating the missing TDS as an open ended extension would hand the buyer something neither the contract nor the statute gave him, since both already supplied a cancellation right he could have used.

That is the line worth carrying around. The Transfer Disclosure Law is a shield for a buyer resisting enforcement. It is not a sword for a buyer who blew a closing date and wants the deal revived.

Conditions precedent are disfavored, and your contract language decides

The court also leaned on an ordinary rule of contract interpretation that gets overlooked in disclosure disputes: conditions precedent are not favored, and clear language is required to create one.

The contract in Realmuto referred specifically to the transfer disclosure statement. The Nasey agreement required "disclosures" generically, then had addenda declaring the sale as is with none required. Same statute, different documents, different outcome. If you are a buyer who wants the statutory sequence to control the closing date, say so in the purchase agreement in those words rather than assuming section 1102 does the work for you.

Note also that the anti waiver provision in section 1102, subdivision (c), did not rescue Nasey. Voiding a waiver of the seller's duty to disclose is a different question from whether the parties made that duty a precondition to closing, and the second question is answered by the contract.

Who actually has to deliver a TDS

Before any of this bites, ask whether the seller owed a disclosure statement at all. Section 1102.2 exempts a long list of transfers, and two of them come up constantly in distressed deals:

• Sales by a foreclosing lender. A mortgagee or beneficiary under a deed of trust that acquired the property at a trustee's sale under a power of sale, at a decree of foreclosure, or by deed in lieu of foreclosure is exempt when it resells.
• Sales or transfers by court order. This covers probate sales in the administration of an estate, sales under a writ of execution, and foreclosure sales themselves.

That exemption is why the seller's posture in Nasey matters. Fell Holdings was a foreclosure purchaser. The court did not have to resolve whether the statute applied, and it did not, but any buyer negotiating with a lender or a foreclosure purchaser should start from the assumption that no TDS is coming and price the inspection contingency accordingly.

What the statute actually gives you is a short window, not a veto

Section 1102.3 requires delivery as soon as practicable before transfer of title. When the statement arrives after the buyer has already signed the offer, the buyer may terminate by delivering written notice to the seller or the seller's agent within three days after personal delivery, or five days after it is deposited in the mail or delivered as an electronic record.

Three days. Five days. Those are the numbers, and they run from delivery, not from discovery. A buyer who receives a late disclosure statement, says nothing, and keeps negotiating for another month has used up the remedy the Legislature wrote. Nasey is a reminder that courts will look at what the statute and the contract already gave you before inventing something more generous.

If the disclosure statement never arrived

1. Pin down whether the seller was exempt. Run section 1102.2 before anything else. A foreclosure purchaser, a lender, an estate selling under court order, or a trustee in some circumstances may owe you nothing, and the whole analysis stops there.
2. Confirm the property is covered. One to four dwelling units brings the sale inside the article even if the parcel also has commercial use, which is the holding of Richman. Purely commercial property is outside it.
3. Read your contract for the word "disclosure." Does it name the transfer disclosure statement, set a deadline, and state a consequence? Or does it use a generic term that later addenda water down? After Nasey, that difference can decide the case.
4. Decide quickly whether you are cancelling or closing. If you intend to get out, exercise the cancellation right in the contract or under section 1102.3 in writing and on time. Continuing to perform while holding the defect in reserve is the posture that failed in Nasey.
5. Do not treat a missing form as an indefinite extension. It is not one. If you need more time, negotiate an addendum that says so.
6. Preserve the record on condition. If the real problem is what the property is hiding, the disclosure statute is only one route. Fraud, negligent misrepresentation, and the broker's independent duties do separate work, and they survive a closing.

What each side should do differently now

Buyers. Stop relying on section 1102 as a background safety net and put the sequence in the contract. If disclosure delivery must precede the closing date, write that as an express condition, with a date and a stated consequence. Where the seller is a bank or a foreclosure purchaser, assume the exemption applies and buy your protection with inspection time instead.

Sellers. Deliver the statement anyway, early, even when you think you are exempt. It costs nothing and it eliminates the argument. If you are the one enforcing the sale against a buyer who walked, Nasey is now the first case to read, because it is the only published decision that takes the buyer's disclosure argument apart rather than accepting it.

Both. Nasey was decided on August 10, 2026 and remains subject to further review, so treat it as the current state of the law rather than the last word.

For related reading, see our discussion of what California sellers must disclose, what to do when a seller failed to disclose defects, and how liquidated damages clauses work when a deposit is at stake. Our legal glossary covers the transfer disclosure statement, escrow, and specific performance.

Talk to a Los Angeles real estate attorney

The Darvish Firm's Los Angeles real estate litigation lawyers represent buyers and sellers in failed escrows, disclosure disputes, and specific performance actions, and our real estate transactions practice drafts the contract language that keeps these fights from starting. If a purchase agreement is about to fall apart over a missing disclosure, the cancellation clock is measured in days. Call (310) 677-3512 or request a consultation.

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts. Consult an attorney about your specific situation.