Does the seller need to disclose zoning changes?

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A man and woman pulling a for sale sign with a sold rider on it with a child running in the background

05/22/2015 | Author: Editorial Staff

My seller client knows that his next-door neighbor has applied with the city to change his property’s zoning. Is the seller required to disclose this information to potential buyers?

The seller and the seller’s agent are required to disclose known material facts about the property. Because the zoning change could be something a buyer would want to know before deciding to purchase the property, it’s a good idea for the seller to disclose what he knows about the potential zoning change.

You may want to inform the seller that, as the seller’s agent, you are also required to disclose known material facts about the property.

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Categories: Legal, Sellers
Tags: legal, legal faq, seller, disclosure, seller's disclosure


Comments

Guy E. Gimenez on 07/13/2015

Anonymous,
it matters very little what I, or anyone else here feels about your situation…you should consult legal counsel.  However, I suspect you have an uphill battle proving potential future damage in such a case as it appears at this point you’ve not suffered actual damages.  Yes, I would have expected to have this information provided IF, as you state, the seller was aware of it.

Anonymous, for now on 07/12/2015

I bought my home in Jan of last year and have just found out that my neighborhood is going to be annexed by the city, and many blocks rezoned to different uses. The zoning map at a block level has not been advertised publicly, and in fact the annexation has also been kept under wraps unless one were to really dig around on the city’s website. However, the neighborhood association leaders and contact teams have been aware of this plans for years, and I just discovered through research that the seller of my home was on the neighborhood contact team that was privy to the details of this plan.

When I entered my address into the city’s zoning website, I further saw that there have been rezoning notifications sent to the previous owner of my home on a few occasions over the years, and checks of MLS history show that he placed it on the market briefly during those timeframes. I suppose he took it off the market when he found out the rezoning wouldn’t occur that year through his inside knowledge.

There is no way I would have discovered this information during the purchase process - is this not considered relevant information about the property that should have been disclosed prior to the sale? He was so anxious to close the deal and never speak to me again, which I found to be strange behavior that I’d never encountered in a previous property transaction, and he didn’t even show up to the closing appointment and instead sent a representative. Suspicious behavior, to say the least.

I’m quite certain my property value will plummet once my block is rezoned to non-residential, and I’m concerned I may be forced to sell at way below market value to some jackass with a bulldozer, so I’m just trying to get some feedback on the legality of a seller omitting this critical information. I understand that you represent your clients, so I don’t want to put you in an awkward position, but again….what if it were your family member who this happened to? Your parents, or grandparents? Please consider that and help me out with a response.

Feel free to reply anonymously if you don’t want your name attached…I’m just in need of help to know what to do. I paid cash for my home and could potentially lose much of my life savings as a result of this action. I would be literally destroyed financially. I never would have bought this home if that information had been made available to me, and it’s obvious that as a neighborhood contact team member communicating directly with city council members that the seller was fully aware of the impending situation. Please help?

Alice Caron on 06/01/2015

Sue you hit it on the head.  I, too, have 30+ years and I think we have seen enough to know that you treat others as you would have them treat you.  Not trying to hurt our sellers but trying to keep them out of hot water and us too!

Sue Loerch on 06/01/2015

As a Realtor with 30+ years experience my advice is that the best way to stay out of hot water is to live by the Golden Rule, “do unto others as you would have them do unto you” and always follow the rules as you know they are intended.  Don’t even think about wiggling around what can come back and bite you, i.e. take your license or cause problems.
Just saying!
Sue Loerch
Asset Realty of Texas

M. E. Atwood, MAI SRA on 05/31/2015

Hmmm…a sticky wicket for sure and easy to see each side.  Judging from the comments it is confusing to most.  As some commented, its splitting hairs, extreme interpretation.  If indeed there are signs all over the neighborhood one would think a buyer would notice them.  As another commented, 200’ is the most commonly seen distance to notify property owners.  So…what if the proposed zoning change is 210’ away and the seller hasn’t received any type of notice from the city?..how about one block, but the seller knew about it?  Where do you draw the line?  Going further, here in DFW we have had numerous earthquakes…does a seller have to report two earthquakes that happened in the last year?..those materially affect the property, but rarely within 200’!...or is that covering by the news reports?  Time and again I’ve been in court and seen judges go with what is fact regarding the subject, and a strict adherence to what the law says.  Interesting for sure.  I’d would like a more detailed opinion from TAR.

Guy E. Gimenez on 05/29/2015

Carol,...copied from TAR’s response above. 

“The seller and the seller’s agent are required to disclose known material facts about the property.”

My only point is that, like most regulations/laws, this is not a black and white issue.  You can believe it’s required and I can believe it’s not required and we can both be right and both be wrong depending on the circumstances.  I do find the carefully worded response curious though.  If it’s required, the statement would not say “it’s a good idea” to disclose but instead would say it is required to disclose.

“...it’s a good idea for the seller to disclose what he knows about the potential zoning change.”

Alice Caron on 05/29/2015

You’re absolutely right Guy.  We don’t disclose.  Our sellers disclose.  If the sellers received notice of a requested change then they have knowledge and should pass that on.  It may not bother the buyers but it will bother them if they find out that the sellers knew and didn’t disclose.  Then they have something to show the judge.

Guy E. Gimenez on 05/29/2015

My agents may not disclose matters of which they have no factual knowledge…period.  They should disclose material information provided by the client (in writing) but they may NOT speculate about “what if”...only “what is”.  Otherwise, they better be able to present their crystal ball in a court of law because I won’t cover their backsides when they’re making “disclosure” statements based on gossip or hearsay.

 

Alice Caron on 05/29/2015

I take care of compliance for approximately 550 agents.  It’s not what you disclose that hurts you…it’s what you don’t disclose.  Since it is zoning, that is not something to lightly gloss over.  I ask myself “If I were selling this to my relative would they want to know?” It makes me think “what else did they not disclose?”  I understand fully about not harming the sellers, but it must be explained that it is potential, not certain.

Guy E. Gimenez on 05/28/2015

This is a absurd reading of disclosure laws.  What if the neighbor applied with the HOA to paint his house pink…does a seller need to “disclose” that the neighbor’s house “might” be painted pink?  In the above scenario, stating a seller (or the listing agent) should disclose what a neighbor might do with the property is clearly an expansion of the definition of disclosure.  If the listing agent tells a prospective buyer that the neighbor is applying for a zoning change, and said zoning change is never granted (or possibly never even applied for), and several potential buyers walk because of this statement, then the listing agent has clearly failed in his/her fiduciary role to represent the seller’s best interest
.
Any definition can be taken to the extreme…and this certainly one of those times.

John Duncan on 05/28/2015

Our Texas Association of Realtors provides a SD that is 5 pages and includes one thing, that still tickles me to this day.

*Has the property ever been used for the manufacture of methamphetamine?

Can’t wait til I get a seller that checks “yes.”

Don’t get me wrong, I understand why it’s there.  It’s just funny.

John Duncan on 05/28/2015

I really like Bruce’s comment on the 28th.  Also I think sometimes agents mistakenly say “material defects” as opposed to “facts.”

D. Lee Edwards on 05/28/2015

A formal application to change use made by a neighbor has the potential of having a material impact on the subject property that could potentially affect value or the neighborhood as a whole.  The notices were sent to neighbors to get their view point.  As a Buyer under contract should only the current owner be privy or should the Buyer who may have an opinion on the change and would want to have an opportunity to voice concern, at planning and zoning or city council, or at lease have the opportunity to find out more.  If your client new of the proposed change, had received a notice of the proposed change that is clearly material information that potentially could have an effect on the purchase. Nothing Grey.  You can not quote what you don’t know.  What you know is a change has been requested to a zoning, if you do not have first hand knowledge to the actual use you would refer the Buyer to the city to find out more.  I would refer them to the city and the person requesting the change and let the Buyer make up their mind.  We are strictly the source of the source.

Martha Beaudry on 05/28/2015

The reason this is a grey area is because the neighbor is applying to change the zoning but has not yet changed it.  So what you’re saying is that a potential issue has to be disclosed.

Bruce Arfsten on 05/28/2015

A couple questions I typically ask myself:
1) If I were the buyer would I want to know?
2) Would I be comfortable answering the question “why didn’t you disclose?” in front of a judge or jury?

D. Lee Edwards on 05/28/2015

As a Broker and a sitting member of my cities Planning and Zoning Commission I assure you that a zoning change is material.  Can you imagine the ire of a Buyer who moves in to a home thinking his neighbor is a home to find out later it has been rezoned during the Buying process to accept a commercial laundry or pawn shop or any number of uses not consistent with his purchase.  The rezoning signs posted in the neighborhood will have what the zoning is being requested to change to and a letter would have been mailed to everyone within 200’ minimum so they can protest or support such a change.  If you are next door, you got a notice.  I would think you better disclose.

Ellen Clark on 05/28/2015

Zoning changes usually have a sign out front in our area so it is public knowledge.
Sold a house near where a proposed major road might be located but you can not get
to the property without passing one of those blue metal signs so we did not disclose.  I also tell buyers to check out the neighborhood by driving through in the evenings.  They are buying a house but they are buying a neighborhood too.  Nobody should depend on the seller disclosure for all the facts.

Pamela Weathers on 05/28/2015

Seller’s should disclose everything they know. If it is not correct then the next buyer will find that out. Disclose, Disclose, Disclose, then the buyers are fully aware, and they will no reason to come back and sue for lack of disclosure. Better to sell to a buyer who is aware of the possible zoning change, and doesn’t care, than to sell to a buyer who does not know about it and then is very , very upset when that occurs. Selling Agents, if you know you have to disclose it, if the seller tells you to withhold pertinent facts about the property you have another problem and you need to check with your Broker about how to handle that issue.

Tammy Martellini on 05/23/2015

It says neighbors property, SD is for the Subject Property. I would think repeating what you heard on neighbors property could be in correct information and now your repeating it too….

Martha Beaudry on 05/22/2015

That seems like such a grey area to me.  I’m curious if others feel the same way.


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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.

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