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Does a buyer have to disclose his contingency?

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07/30/2015 | Author: Editorial Staff

My buyer client needs to close on the sale of his current home to afford purchasing a new home. Must he disclose this to the seller?

Yes. If your client’s ability to perform under a contract (i.e., close the transaction) is contingent upon the closing of another property, the contingency should be made part of the contract by using the Addendum for Sale of Other Property by Buyer. Otherwise, the buyer risks default under the contract if he fails to close because the sale of the other property doesn’t close. Default by the buyer could result in the loss of earnest money. The seller could also take action for specific performance or other remedies through the legal system, or both.

Remember, while your primary duties are to your client, you also owe a duty of fairness and honesty to the seller. If you know when an offer is made that your buyer cannot perform under the terms of a contract and you don’t disclose this to a seller, you may be breaching your duty to the seller, and there’s potential for a claim that you and your buyers have made material misrepresentations or misstatements to the seller or the seller’s agent.

Read more legal questions and answers on texasrealestate.com.

Categories: Legal
Tags: legal faq, contingency, buyers

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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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