Does a seller have to fill out the disclosure notice for a property he hasn’t seen?

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05/07/2015 | Author: Editorial Staff

My buyer wants to purchase a residential property owned by an investor who hasn’t seen the property in years. The owner refuses to fill out a seller’s disclosure notice, except to note he has no knowledge of the property’s condition. Is this sufficient disclosure?

The Texas Property Code requires a seller of residential real property comprising not more than one dwelling unit to provide a seller’s disclosure notice to the buyer. The Property Code doesn’t offer an exception to the requirement because a seller hasn’t seen or lived in the property. After all, knowledge of the property can come from sources other than a visual examination, such as complaints from tenants or reports from property managers.

Failing to provide a completed seller’s disclosure notice to the buyer may entitle the buyer to certain remedies, like terminating the contract.

Remember, a buyer should never rely upon the information provided by a seller concerning the condition of the property, even in a situation in which a completed seller's disclosure notice has been provided. A buyer should always have his own inspection done to satisfy his concerns about the condition of the property.

Get more answers to legal questions on texasrealestate.com.

Categories: Legal
Tags: legal faq, seller's disclosure, property management


Comments

william chappell on 02/10/2016

Can anyone answer this question?
Ann Jost on 05/07/2015
If an estate is handled within a trust, does the trustee have to fill out the Seller’s Disclosure?  The trust has owned the home for years.  The trustee has not lived in the house for 30+  years and is the daughter of the recently deceased owner.  It is going on the market next week.

I am in the same boat.  Trust was in deceased husbands name and daughter of estate is handling it.  Please help.
William

Randy Wilson on 05/14/2015

I had a seller a year ago refuse to do a sellers disclosure even though he had lived in the house for nearly 10 years.  I had bugged him all thru the listing period to get it done and he always said later, when we get a contract. When the contract showed up, he refused to write it.  I told him state law required it and he said “I don’t care”. The best I could do was tell the buyer’s agent that they weren’t going to get a sellers disclosure so buy or don’t buy, their choice. I told my client that if the buyer down the road has issues he was likely to hear from their attorney rather than from them. His response was good luck finding me, I’m moving out of state and off the grid.

C. W. Holt on 05/11/2015

Can the parties contractually agree to waive the requirement of a Seller’s Disclosure?

Alice Caron on 05/11/2015

Here’s what I tell our 500+ agents regarding compliance with Sellers Disclosures:  “It’s not what you disclose that hurts you—it’s what you don’t disclose.  When in doubt—DISCLOSE IT.”  If your sellers are investors and don’t know about it, ask their property managers about it.  If they find out that you filled out a SD saying unknown and they find out you wrote a check to repair something through your Property Management Company, you’re going to have to talk to someone about it.  Might as well do it up front and save the legal fees.  Be aware of when a SD is not required as posted before by Cynthia.  Also, be aware that neighbors just love to talk about the juicy goings on in their neighborhood.

Ann Jost on 05/07/2015

If an estate is handled within a trust, does the trustee have to fill out the Seller’s Disclosure?  The trust has owned the home for years.  The trustee has not lived in the house for 30+  years and is the daughter of the recently deceased owner.  It is going on the market next week.

Andrea Usanga on 05/07/2015

Thanks for posting this. Lately, I have seen more and more listing agents say that the seller won’t complete a disclosure, which clearly is a violation of the Property Code.

Cynthia I. Lott on 05/07/2015

Section 5.008 of the Texas Property Code states that a Seller’s Disclosure Notice is not required if:

(1) pursuant to a court order or foreclosure sale;
(2) by a trustee in bankruptcy;
(3) to a mortgagee by a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest;
(4) by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a power of sale under a deed of trust or a sale pursuant to a court ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;
(5) by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;
(6) from one co-owner to one or more other co-owners;
(7) made to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;
(8) between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to such a decree;
(9) to or from any governmental entity;
(10) of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes; or
(11) of real property where the value of any dwelling does not exceed five percent of the value of the property.

Additionally, the Texas Property Code states that a seller or seller’s agent shall have no duty to make a disclosure or release information related to whether a death by natural causes, suicide, or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, may have had, has, or may have AIDS, HIV related illnesses, or HIV infection.

Please note, however, that if a seller knows anything about a property and is exempt from providing a Seller’s Disclosure Notice, they are not exempt from disclosing the information with the exception being death by natural causes, suicide, or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, may have had, has, or may have AIDS, HIV related illnesses, or HIV infection which is not to be disclosed.

I have found the best way to help sellers who are required to provide a Seller’s Disclosure Notice is to discuss DTPA lawsuits with them that come with treble damages as most of the lawsuits in real estate occur because a seller failed to disclose.  When a seller asks me about disclosure, my response is always, “Disclose, disclose, disclose.  If in doubt, disclose.”

It is important for us to remember as licensees that we are the teacher and our clients are consumers who are not experts in the field of real estate.  Sometimes, a quick teaching lesson will make them understand the importance of doing something as in this situation which is providing a Seller’s Disclosure Notice.

 

Dwayne Gregory on 05/07/2015

To my recollection, Seller’s Disclosure is required by Law in the State of Texas however I believe that’s not the case for multi-family property. 

Can someone verify please?

Maung Kyaw on 05/07/2015

In one to four residential contract , it states that
7.B. SELLER’S DISCLOSURE NOTICE PURSUANT TO §5.008, TEXAS PROPERTY CODE (Notice):
(3) The Seller is not required to furnish the notice under the Texas Property Code.

I always thought seller is not required to provide the seller disclosure if it is an investment property.

Can you verify?

Where can I find the Texas property code that mentioned in the contract.

Ken Smith on 05/07/2015

This is a good solution. No disclosure, buyer has the right to terminate all the way up to the closing date. I put very little trust in Seller’s Disclosures anyway, and think TREC is inadvertently giving buyers a false sense of security. Buyers should either inspect and/or negotiate a worst case AS-IS price. Therefore, in most cases, a true and accurate disclosure can actually help the seller!


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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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