Legal FAQs for REALTORS®
— Contracts and Forms
Under what conditions would the seller check the box in paragraph 7C to show that the seller's disclosure notice is not required? (updated Jan. 1, 2002)
The Texas Property Code disclosure requirements are applicable to the sale of a property comprising not more than one dwelling unit, but do not apply to a transfer pursuant to a court order or foreclosure sale; by a trustee in bankruptcy; to or by a mortgage or beneficiary under a deed of trust or pursuant to a court ordered foreclosure or acquisition by a deed in lieu of foreclosure; by a fiduciary in the administration of a decedent's estate, guardianship, conservatorship, or trust; from one co-owner to one or more co-owners; made to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors; between spouses resulting from a decree of dissolution of marriage or legal separation or from any governmental entity; transfers of new residences of not more than one dwelling unit which have not been previously occupied for residential purposes; or transfers where the value of any dwelling does not exceed 5% of the value of the property.
Do the Texas seller's disclosure requirements and the federal lead-based paint regulations apply to residential foreclosure properties built prior to 1978? (updated April 29, 2010)
Yes and no. Seller's disclosure requirements do not apply to foreclosure sales, or to the subsequent sale by a foreclosing lender (Texas Property Code Section 5.008). Foreclosure sales are also exempt from the federal lead-based-paint disclosure requirements. However, a subsequent sale by the purchaser at a foreclosure sale, including a foreclosing lender that purchased the property at the foreclosure sale, is not exempt from the lead-based-paint disclosure requirements for pre-1978 property. Lenders or any other buyers who purchase such property should complete and attach the TREC lead-based-paint addendum (TAR 1906) to the sales contract and provide the federally approved pamphlet to the buyer. REALTORS® involved in those transactions must ensure compliance with the federal regulations by the selling lender (or other seller) as stated in the addendum. Remember, you risk a $10,000 penalty and up to three times the damages to someone injured each time you violate the federal lead-based-paint disclosure requirement.
Where does the broker disclose whom the broker represents? (updated Jan. 1, 2002)
Disclosure of representation, including intermediary status, is made in the box captioned "Broker Information and Ratification of Fee" on the last page of each form.
When is a seller not required to provide the Addendum for Seller’s Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law to a buyer? (updated September 28, 2016)
A seller does not have to provide the addendum in the following situations:
1. Property constructed after January 1, 1978
2. Property sold at foreclosure
3. A dwelling where the living area is not separated from the sleeping area (such as efficiency apartments, dormitory housing, or individual rooms)
4. Housing for elderly or disabled residents where no child under six years old is expected to reside.
There are also exceptions for rental properties, which you can read about in the legal FAQs on texasrealestate.com.
My client was named the executor of his mother’s estate after she passed away, and now he’s planning to sell the house she owned. 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? (Updated Jan. 15, 2016)
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 Texas Property Code statute regulating seller’s disclosure notices. Click here to see the code, and scroll down to Section 5.008(e), which lists the exemptions. 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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