What does the executor of an estate have to disclose to potential buyers?

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10/27/2014 | Author: Editorial Staff

My client has been named the executor of his mother’s estate. She recently passed away, and he is planning to sell her home. He hasn’t lived in the property, so he has no idea if there are any existing issues. Is he still required to furnish a Seller’s Disclosure Notice to potential buyers?

No. Certain types of sellers, like an administrator or executor of an estate, are not required to provide a seller’s disclosure notice to prospective buyers. The seller should check the box in Paragraph 7B(3) to show that the Seller’s Disclosure Notice is not required. This situation is one of the 11 exemptions found in the statute regulating seller’s disclosure notices.

Remember that even though this type of seller is not required to provide a disclosure notice, he must still disclose any known material defects.

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Categories: Forms, Legal
Tags: disclosure, seller's disclosure, forms, legal, legal faq


Comments

Brian Johnson on 11/13/2014

I wish the article would have more emphasis on defining the executor of the estate. I see so many new agents think no disclosure is required since they are selling property that was acquired through a relatives estate and was already in their own name.

Michael Dougan on 10/31/2014

I have been in the construction and inspection business for 45 years. My firm is a multi-service inspection company with over 100,000 inspections of all types completed to date. More often than not we find things that are in need of repair in homes that the seller truly didn’t know was a problem, issue, or deficiency. I.E., seller installs his own water heater but fails to put on a T/P relief valve because they didn’t know it was required. The disclosure is filled out but the seller doesn’t list that as a deficiency. Of course this is listed on the inspection report during negotiations.  Now, the buyer becomes suspicious of the credibility of the seller regarding “full disclosure” Well, as an agent then you all know were it goes from there. We have tried marketing the simple solution for decades….it’s called a presale marketing inspection.  It’s very simple and straight forward and relieves the seller of almost all liability associated with the property condition “disclosure”. The seller gets the inspection…fixes the deficiencies..discloses the repairs as being already fixed (with attached receipts)...the buyer is happy because the seller was up front and honest, which builds confidence for both parties…streamlines the time involved to get to closing…. everybody is happy.  OR, the deficiencies are disclosed along with the inspection report and the price of the house is reduced OR monies (dollar amounts of repairs) for repairs are exchanged between buyer and seller at closing….everybody is happy.  It is not likely or even possible that the young or elderly seller has ever crawled under their home to check out the plumbing or went up in the attic to check out the wiring or heating ductwork. The seller assumes that the plumbing is draining but, has no idea the plumbing is actually draining into the crawlspace. If the buyer’s inspector finds the problem and possibly many others that the seller had no clue about then the seller is accused of NOT DISCLOSING. My firm is not the only inspection company that has tried to market the presale inspection concept over the years. We believe this is a simple solution to a very real and sometimes legal problem. Now. more than ever, in our legalistic society, we are beginning to see more and more presale inspection orders come across our desk for the very reasons as stated above.

Linda Niehuus on 10/30/2014

While I appreciate that Barbara thinks that the son “should” know all about his mom’s house, I can think of many instances when that wouldn’t be the case and have personal experience with just such an instance. Furthermore, there are often multiple family members involved in the estate (I’ve seen as many as 12) and often they don’t communicate fully with the Executor. So, to require that the Executor complete a SDN is not reasonable. I agree that if they know something material, they have a duty to disclose it. But, again, to require them to complete the form may cause more confusion than any benefit that might be derived. I believe Texas’ plan is good and justifiable.

Rick DeVoss on 10/30/2014

I do not think the inspector’s comments help any on the issue that Realtors are talking about on here.  ~Unless you say that every seller should pay for an inspection, and then give a copy to the buyer.

Perhaps we need to go to one extreme or the other, instead of straddling the fence like we are doing now in Texas.  Either make ALL sellers fill out a Disclosure Notice, or just let the “buyer beware”, and then the buyer can get his own inspection.

(And,  Chris, if all inspections were as perfect as you are describing, why would we need a “seller’s disclosure”?  We could just get an inspection, and then we would know everything on both sides of the table.)

Chris Coaty on 10/30/2014

I am a Professional Home Inspector in the Austin area. Thought perhaps some feedback from my side of the industry may help.

I always ask about a SD. Its important information that my client and myself need to know about. A good inspector will more than likely find the deficiencies anyways and it just takes away your credibility as an agent when the other party in the transaction feels like your trying to pull one over on them. It can cost you a sale in a hurry. I have seen this happen several times and usually results in poor reviews and comments on sites such as Yelp or Angies list at the very least. I have been in the construction, maintenance and repair industry for over 14 years and have been inspecting properties for several years. I have seen and repaired multiple types of damages, remodeled many of properties, built lots of additions etc… Most inspectors have a background such as mine and know precisely what to look for. As an inspector I have had many jobs that didn’t have a disclosure, however even a blind man could spot major deficiencies on the structure (i.e. foundations/roofs). Please do not assume that your smarter than the inspector and two coats of paint will cover water damage, lol. Our tools and techniques are state of the art these days and we will catch most deficiencies, disclosed or not. Thermal imaging technology basically lets us see through walls.

At the end of the day it would seem to me to be in an Agents best interest as well as the seller to disclose any pertinent information, even if it means giving your mothers house your not familiar with a walk through.

Hope that helps.

barbara reeves on 10/30/2014

Please comment on the fact that the Executor is her son for heavens sake I’ll bet mom called him everytime the faucet leaked.  So he would have some knowledge and being the executor would likely have any paper work in mom’s papers of warranty, billing, recent repairs or purchases etc.

Fred Buck on 10/30/2014

These are great reminders that disclosing known defects are best included on the Seller’s Disclosure Notice. Even if the seller has an exemption. Knowledge of a defect must be shared when the seller or agent is aware of it.

Linda Niehuus on 10/30/2014

The problem I see with having an Executor fill out a SDN when they are not required to do so is that it can give the Buyer a “false sense of security” in that the Buyer may assume that the Executor would know if there was something materially wrong with the house. Sometimes that is the case, but not always. Also, there may be liabilities associated with doing so that the Executor doesn’t wish to undertake. If they don’t know of any issues and fill out the SDN accordingly, but there are some that are later discovered, then the Executor may be held liable for not disclosing since they filled out the form and didn’t make mention of it.

Thomas Diep on 10/30/2014

SD is only there for paper work requires by law.  If you’re a buyer’s agent you need to tell your buyer not to rely on it unless facts like insurance claims, or foundation works that have been disclosed.  Everything else is need to be check by professional inspectors or builders.  If you’re a listing agent you need to emphasize to your client that SD is there to protect them NOT against them so tell them to disclose as much as possible but of course to the best of their knowledge.

Chip Staniswalis on 10/30/2014

About a year ago the former General Counsel for TREC was in town and sat down with us for an extensive Q&A. The above question was raised and her response was that, Yes, in her opinion, an Executor/Administrator who is an heir to the estate, should complete the Seller’s Disclosure form because, chances are, the heir does know something about the condition of the property. Most real estate attorneys advise us to err on the conservative side of these issues. What good reason would there be not to complete the form?

Bobbie Allen on 10/30/2014

Thank you, Rick for your response which, of course, makes sense; however, should that not be addressed at the time you are taking a listing and the seller/executor is executing documents?

Sarah Lee Rose on 10/30/2014

Great article but many agents will NOT read it all and they simply stop when it says “no”.  This is a huge issue and agents need to understand that the neighbor knows the son knows and that is a law suite waiting to happen.  It is ALWAYS best to disclose.  The other big issue is thinking the seller doesn’t have to disclose an inspection that a previous buyer did.  Wrong.  The question says “have there been any previous inspections?”  And that answer is YES!  Agents please do not be afraid to disclose - the issues to be afraid of is when the seller does not want to disclose.

Rick DeVoss on 10/30/2014

I think that these posts by the “editorial staff” should have a person’s name attached to them.  (Maybe the senior attorney could take responsibility for what is published.)

I am confused by the last statement:  “...this seller is not required to provide a disclosure notice,  (but) he must still disclose any known material defects.”

What is the difference?

Why don’t we just use one of the forms that have been drawn up, and then state that there are, or are not, any known material defects…?

It almost seems like the statement that was made above is a contradiction of terms.  I fear that many agents will be confused by this type of statement.  There is already much confusion about how to handle the SDN when it IS provided by the seller.  Let’s not make it more complicated when it is not provided.


David Hooker on 10/30/2014

Hi Bobbie Allen, that would be the One to Four Family Residential Contract, where 7.B.3 would be checked.

Bobbie Allen on 10/30/2014

You referred to paragraph 7. B.3.  WHAT FORM WILL THIS BE FOUND?  LISTING AGREEMENT, SELLER DISCLOSURE?  I find it in neither and will be meeting with an executor at 5 pm today to execute papers for a listing.  PLEASE ADVISE.

Diego Marin on 10/30/2014

I work with a Court Appointed Administrator and it’s just so much easier and quicker to provide the exemption.

Diego Marin on 10/30/2014

I with a Court Appointed Administrator and it’s just so much easier and quicker to provide the exemption.

Suzanne Gantner on 10/28/2014

As a certified probate real estate specialist, I always get the executor to fill out the sellers disclosure to the best of their ability and to include the additions, upgrades and improvements that they are aware of.  It usually isn’t that difficult to fill out whats in or on the property.

Andy Hemmings on 10/27/2014

Good post. This is an often misunderstood issue, especially in regards to the Executor still having an obligation to disclose any known material defects.  It’s my understanding that the Executor, though not required, is not prohibited from providing a Seller’s Disclosure Notice, filled out to the best of their knowledge.  It’s a debatable issue as to whether or not they should do so but is something for them to consider.


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