Jul. 3, 2006
Dear George: I have a question related to disclosing a murder when selling our house. Five years ago, I bought a piece of land where the previous house had burned down. At the time I bought the house, I was told that two people had died in the fire that burned the house down. I removed all remnants of the house, foundation and all. After talking with some of the neighbors, it seems there was a domestic dispute that occurred before the house caught fire. Some neighbors are claiming a murder occurred, and then the house was set on fire. I'm not superstitious about this and it does not bother me, although I do feel bad for the previous family's loss.
I just finished builing a brand new house on the land that I bought. I'm considering selling this house. Do I have to disclose what happened before I built the new house? It seems to me that what happened in the past should not carry forward to my new house.
Answer: There are two schools of thought about what should be disclosed in the Seller's Disclosure Notice, whether you use the Texas Real Estate Commission form that contains only the minimum language required by the Property Code or the Texas Association of REALTORS® form that contains additional disclosures. The first school of thought is that if you have to ask whether something should be disclosed, then it probably should be disclosed. If there is no logical place to enter the item, attach an additional sheet and make it a part of your seller's disclosure.
The second way to look at it is to examine what you're disclosing. Is it a fact, or is it a rumor? After all, the form is a "disclosure of seller's knowledge of the condition of the property." What you've described indicates that you don't know if there was a murder. However, some people are really uneasy about death, and it may be easier to disclose the rumor and deny any personal knowledge in the event that a buyer discovers the rumor, as you did, and sues you.
There is no duty in Texas for an owner or his agent to disclose a death that occurred on the property by natural causes, suicide, or accident unrelated to the condition of the property. However, many purchasers take sellers to court and claim that they never would have bought the property had they known there had been a death on the property. Although a Texas seller has no duty to disclose such a death, under common law in a jury trial the seller may still have some liability to a buyer. I recommend the death be disclosed on the Seller's Disclosure Notice, unless such disclosure is illegal. By making sure the purchaser knows of the death, the seller removes the possibility of any subsequent claims.
Dear George: When is a contract considered executed?
Answer: It becomes a contract when it has been executed by both parties and both parties know it. The one who accepts the offer must communicate acceptance back to the one who made the offer, either verbally or by delivery of a written document. Someone making an offer can rescind his offer up until mutual assent has been achieved. That whole process can, however, create a lot of confusing fact situations.
Dear George: As an investor in Texas, am I breaking the law if I pay someone a referral fee for a home I purchase or lease?
Answer: We are going to assume that neither you nor the person to whom you are paying the referral fee is licensed as a real estate agent in Texas. Therefore, the person to whom you pay the referral fee is breaking Texas law "if the referral is made with the expectation of receiving valuable consideration" (TREC Rule §535.20). Valuable consideration includes but is not limited to money, gifts of merchandise having a retail value greater than $50, rent bonuses, and discounts. The Texas Real Estate Commission adopted the $50 rule to allow apartment complexes and real estate licensees to reward unlicensed customers, including tenants, for referring others to an apartment complex or for generally referring business to real estate licensees. And if you pay this person a referral fee in any form not permitted by the above rule, then both you and the person receiving the fee most likely would have some exposure to liability for violating or colluding to circumvent the Texas Real Estate License Act.
Dear George: We recently purchased a house in development. The developer refuses to turn the homeowners association over to the property owners until the development is 100% built out. This 100% built-out stipulation is written in the HOA documents, but isn't there a Texas law requiring developers to turn over associations at some lesser percentage?
Answer: It depends upon how one defines "built-out." If 100% built-out means that 100% of available homes in the subject subdivision have sold to owners and all the owners who purchased homes provided written agreements to those documents prior to purchasing, then the homeowners association documents will prevail. The developer must follow the rules set forth in the association documents.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.