What a buyer can do when he hasn’t received the seller’s disclosure notice

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Professionally dressed man ripping a contract in two

05/14/2015 | Author: Editorial Staff

My buyer is purchasing his first home. His option period has ended, and it’s eight days from closing. My client still hasn’t received the seller’s disclosure notice, and asked me if he can terminate the contract. Can he?

Yes. The One to Four Family Residential Contract (Resale) provides that if the notice is not received, the buyer can terminate at any time prior to closing and the earnest money will be refunded.

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


Robert on 05/21/2015

The blog post was about the SDN which by the way is not required for an offer to be accepted and get to the final stage of closing and funding. 
Without the purchaser receiving the SND (without the purchaser signing and returning a copy the only other surefire way is by certified mail return receipt requested), just like the post states, the purchaser has the right to terminate the contract at the closing table or before and receive the earnest money.  This is a seller to purchaser obligation and if the seller does not comply then the purchaser automatically receives the right to terminate at any time and receive the earnest money (it’s not what you know it is what is on paper).  That is why there is paragraph 21. NOTICES: in the 1-4 SFR contract.
Docusign (whatever vendor you use for elec sigs) might be another surefire way to document the purchaser received the SDN which is another plus for filling out paragraph 21. Sadly emails get lost all the time these days so Docusign may not be as surefire as the USPS.

Jan Smith on 05/17/2015

I like editorals, some times I have not time to read, an this small
helps me keep up.

Bruce Ericison on 05/15/2015

Why fight the signing of the Seller Disclosure by the buyer?  Right above the space where the buyer signs it plainly says on both TREC and TAR versions “The undersigned Buyer acknowledges receipt of the foregoing notice.”

Sure some agents and so called managers who ask for a signed copy when the contract clearly says “buyer has received” are over the top with CYA.  But are they doing it for themselves or their clients?  Do you ever require your client as a buyers agent to sign stuff that is not required by TREC .. sure you do because it is good info for them and you would like their acknowledgment they got it from you.

As for the seller not living in the home .. well the Texas Property Code say “The notice shall be completed to the best of seller’s belief and knowledge as of the date the notice is completed and signed by the seller. If the information required by the notice is unknown to the seller, the seller shall indicate that fact on the notice, and by that act is in compliance with this section”

I challenge any seller who owns a home and says they do not know anything about it is not telling the truth.  Yes we all can come up with a scenario where you inherited a home and then sell it with out knowing anything about it but even there I bet someone has given them a description of the property and its general condition. Look in previous paragraph .. nothing about living in the home .. just ” belief and knowledge”.

Yes lets follow the intent of the rules .. prepare and present the Sellers Disclosure. Oh and make sure you have proof of each when TREC comes a calling to review your file when they get a complaint from your client.

Happy Selling ....

David Davis on 05/15/2015

I agree with Rick.  All Agents need to stop practicing law, and pretending to be GOD.  Represent your Client, but let the parties work it out!  When I get a request for some document from a listing agent (when I am working for the buyer) I present the form and explain it to the buyer, and let the buyer decide if they want to provide it.  As a general practice (when I represent a buyer) I encourage the buyer to sign the Seller’s Disclosure Notice and provide a copy to the listing agent with the offer especially if the seller signed version is in the MLS documents.  Same thing applies with the Lead Based Paint Addendum (Yes, I know this one is made a part of the contract) & Notice To A Purchaser Of Real Property In A Water District.

As for the seller that directs an agent to not present an offer unless/until… While the seller certainly has this right, I would require documentation from the seller that those were his/her instructions.  I would also advise that seller that one of my obligations is to present any/all offers regardless of their completeness or otherwise.  Naturally, the seller is not required to sale or sign anything that (s)he doesn’t want to sale/sign, but as an Agent the duty to present the offer still remains.

Walter Stewart on 05/14/2015

OK folks let us not forget that the Seller doesn’t have to sell the property at any price and he not his agent may require most any document he desires before considering any offer a Buyer may wish to present to him.  The agent must let him know of the offer but if the Seller says don’t send it to me until the Buyer signs the SDN and submits approval or prequal letters he has that right.

THERESA AKIN on 05/14/2015

Am working on a transaction currently that the SDN is in the documents section of the MLS listing.  I emailed it to my buyer and they have yet to sign it but they have received it by email. We look at all documents before making an offer. Then go from there.  So far it’s not been signed.  One broker said each page of the SDN needed to be initialed.  There is no where for designated initials. I don’t tell them to. We’ve gone over it but no signature.  In the contract we marked “buyer has received notice”. That is all that is necessary. I look at the MLS listing for any special requests/instructions, etc. If the listing agent stated the seller wanted this and that and didn’t put it into the MLS under Agent Remarks then the agent needs to go back and edit the listing. As long as my end has complied the listing agent better present my clients offer or suffer some consequences like answering to the board.

Jean Pasvar on 05/14/2015

I enjoy reading some of Rick DeVoss comments. You bring up some interesting points about a Listing Agent making requirements on offers.

I recently presented an offer in this strong Seller’s Market wherein the Listing Broker/Agent emailed me a
Letter that she wanted my client to answer a list of questions that frankly had nothing to do with the offer and in addition wanted the buyer to agree in the Contract that if the house did not appraise that the buyer would pay in cash the additional funds. And without this letter she would not submit the offer. I gave her the answers to a few of her questions and told her that I expected her to present my client’s offer to the Seller.  We did not get the house even with offering $10k over list price on a $130k listing . I am curious to see what the house sold for and I guess we will never know if our offer was actually presented.

Rick DeVoss on 05/14/2015

Oh, Ken, ...you have gotten us started.

What about the Listing Agent who says she will not even present your offer to her client UNLESS you send along a “pre-qual letter” from a lender…?  ~Or, a “proof of funds” letter from a banker?

These documents are Not a part of the contract.  They may be provided by a buyer to make his offer appear stronger to the seller, but they cannot be ‘required’ by anyone.

Is it legal for the listing agent to not present the offer??
Is it even proper advice for her client when we all know that most “pre-qual letters” aren’t worth the paper they are printed on!  (...and many times it is just an email that is not even Signed by the lazy loan officer.)

We need to stop generating our own paperwork requirements and go back to the basic TREC forms.  There is one Dallas-based firm that has designed a 6-page seller’s disclosure notice.  Is that really necessary?  Does that protect the seller more than a 4-page notice?    ...or, was it designed to protect the broker?

What about a 1-page note that says “I know nothing about this house because I have never lived in it.”....?    ~Get an inspection!


Ken Smith on 05/14/2015

You have brought up a very interesting side-topic. Brokers, Agents and CERTAINLY Office Managers need to get it through their thick skulls that they are NOT a party to the contract. These CYA forms are getting out of control. I cannot wait for the first lawsuit brought by a buyer or seller against a firm because they screw up a deal over paperwork. Plaintiff to Defendant: “So let me get this straight, You are actually telling me I cannot buy/sell this property unless the other side provides you with a piece of paper for your files??? Good luck defending that position!”

Rick DeVoss on 05/14/2015

Now we are on a good topic!  (I predict lots of responses.)

What if the seller changes the SDN, and sends it to the buyer after the initial period has expired, like 3 days before closing…?  (Do you have to acknowledge it when you have already received the first SDN?)

What if the seller has done what the law says he has to do by sending the notice to the buyer, but he can’t prove that he gave it to her?  Doesn’t Paragraph 7 cover the delivery of the SDN to the buyer when it says “Buyer has received the Notice”...?

Has everyone noticed that the Texas Code says the seller has to give “a notice” to the buyer, but it does NOT say that the buyer has to sign it and give a copy back to the seller?    (That was made up by some office manager who is trying to CYA.)

Since the buyer’s agent does not work for the Listing Broker, how can they require a copy signed by the buyer be returned to them?  TREC doesn’t require that, so why aren’t we all following standard TREC procedures?

I’m sure everyone knows that the SDN is NOT an attachment to the contract.  Is it sufficient for the listing gent to post it in the MLS document section?  Assume that they have, and the box in Paragraph 7 was checked to say “Buyer has received a copy of the SDN”, isn’t the subject closed?

I am getting really tired of office managers/other agents who insist that I have to send a copy back to them signed by the buyer.  The form that most of us are using was not made up by TREC, and the fact that there is even a line at the bottom for the buyer to sign is arbitrary.  (I could design a form for sellers to use that does NOT have a buyer signature line on it.)

Let’s all follow the intent of the rules, and stop practicing office risk management when the agent you are talking to does not work for your office.


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