Selling an LA apartment building requires a specific set of disclosures — some by federal law, some by California state law, and some by local LA jurisdiction. At minimum, sellers typically must provide: natural hazard disclosure, lead-based paint disclosure for pre-1978 buildings, Mello-Roos disclosure where applicable, transfer disclosure requirements, and specific LA City or LA County compliance documentation for rent-controlled buildings. The exact requirements depend on building age, location, and specific characteristics. Getting disclosures right pre-listing is the difference between a clean escrow and one with unexpected friction.
Lead-based paint disclosure applies to any building constructed before 1978. Sellers must provide the required EPA lead disclosure form, including any knowledge of lead-based paint or hazards. Tenants are typically also informed through separate ongoing disclosure obligations. On pre-1978 LA multifamily (the majority of the older stock), this disclosure is mandatory.
Natural Hazard Disclosure Statement. California requires disclosure of whether the property is in specific natural hazard zones — earthquake fault zones, special flood hazard areas, very high fire hazard severity zones, among others. Typically produced by a third-party hazard disclosure report vendor.
Megan's Law database disclosure. Buyers are directed to the state sex offender registry database. Standard language in the purchase agreement.
Transfer disclosure requirements. California Civil Code requires disclosure of certain known material facts about the property. On apartment buildings, this typically includes known construction defects, past insurance claims, ongoing litigation, and similar material information.
Soft-story ordinance disclosure (Los Angeles). For pre-1978 wood-frame soft-story buildings in LA, disclosure of ordinance applicability and compliance status is required.
SB 721 balcony inspection disclosure. California requires periodic inspection of elevated exterior elements (balconies, decks, stairways) on buildings with three or more units. Compliance status is a standard disclosure item.
RSO registration status (LA City pre-1978 buildings). Current registration documentation and compliance status. This is effectively required for the transaction to close cleanly.
LA City Tenant Anti-Harassment Ordinance. Disclosure and certification regarding compliance.
LA City Just Cause Eviction Ordinance. Applicable compliance documentation.
LAHD (LA Housing Department) certifications. For rent-controlled buildings, registration and good-standing status.
LA County RSTPO documentation. For unincorporated county buildings, equivalent documentation.
Specific local ordinances. Depending on the specific city (Culver City PRCO, Santa Monica RSPO, etc.), applicable local rent control compliance documentation.
Beyond the regulatory list, sellers typically disclose:
Rent roll and tenancy history. The exact composition of tenancies, including any non-standard arrangements.
Operating statements and tax return reconciliation. The income and expense history of the building.
Any known defects or issues. Roof condition, plumbing concerns, electrical issues, foundation observations, pest issues.
Permitted and unpermitted work. Any capital improvements, renovations, or modifications and their permit status.
Environmental history. Any known environmental incidents, current or historical USTs, or relevant environmental assessments.
Litigation and claims. Any ongoing or recent litigation, insurance claims, tenant disputes, or regulatory actions.
Assessments and special charges. Any pending or contemplated special assessments, Mello-Roos obligations, HOA obligations.
Beyond statutorily-required disclosures, the purchase agreement itself typically contains representations and warranties from the seller — statements about the property that the buyer relies on and that the seller can be held to post-close. These reps typically cover rent roll accuracy, compliance status, absence of undisclosed litigation, and similar items. Getting the reps right is important. Overly broad reps create seller exposure after close. Overly narrow reps can kill the deal. The balance is typically the subject of negotiation during the purchase agreement drafting.
The single best pre-listing practice on disclosures: identify every required and advisable disclosure item, gather the supporting documentation, and present a clean disclosure package at listing. Buyers read this as a signal that the transaction will close cleanly. Sellers who spring disclosure items during escrow signal the opposite. The specific disclosures required depend on building age, location, and characteristics. A qualified broker and, where warranted, specialized counsel can produce the specific list applicable to a specific building.
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Can I be sued after close for undisclosed issues?
Yes. Undisclosed material facts that the seller knew about can produce post-close litigation. This is why accurate disclosure pre-close is in the seller's interest — it caps exposure.
What if I don't know the answer to a disclosure question?
Disclose the uncertainty itself. Stating what you do and do not know in writing is different from staying silent on the topic.
Do I have to disclose prior insurance claims?
Generally yes. Past claims history is typically part of the material facts a buyer is entitled to know.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap. This is informational, not legal advice — consult specialized counsel on disclosure-specific questions.
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