Callers have been confused about when sellers must provide the Seller’s Disclosure Notice to buyers. Section 5.008 of the Texas Property Code says that the disclosure notice must be provided to a buyer on or before the effective date of the contract. If the seller does not furnish the notice on or before the effective date, Paragraph 7B(2) of the One to Four Family Residential Contract (Resale) allows for the parties to stipulate how many days the seller has to provide the notice. However, a seller who provides the notice after the effective date gives the buyer the opportunity to terminate the contract for any reason within seven days after receiving the notice—or if the seller never delivers the notice, at any point prior to closing—and receive a return of his earnest money.
Laura Miller, associate attorney
Perhaps I missed something…
…If the Texas Property Code, The Law, says that the SDN must be provided on or before the effective date of the contract, how can TREC say (in Paragraph 7) that it is OK to submit the SDN to the buyer at a later date…?
Could the TAR attorney post an explanation for all to read?
You ever think of reading 5.008C of the TPC? TREC is not saying anything, it is spelled out in the TPC what happens if the SDN is not delivered on or before the contract is executed. So you don’t have to take the time to look it up, here is what the TPC says: “The notice shall be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property. If a contract is entered without the seller providing the notice required by this section, the purchaser may… Read more »
No lender will close without a SD. You can supply later gives buyers 7 days to terminate upon receipt and a full refund of earnest money from date supplied. If you don’t get it upfront when listing your doing a great disservice to your seller
Does that mean the buyers technically do not need to pay the option fee to have the right to walk away for defects in the property?
If a termination option is in the contract, buyer doesn’t pay the fee within 3 days, and the contract gave the seller more than 3 days to deliver disclosure, and they deliver timely, your buyer is in a bind. So, not a good approach.
The biggest issue I have run into is agents who post on MLS “No Disclosures” and write in Agent Remarks “No Seller’s Disclosure”. Unless it’s a foreclosure, estate sale or sale to a spouse there really isn’t a valid reason to not provide a disclosure. My question is, What if the seller refuses to provide a disclosure? Some investors think they are exempt and will not provide one and will only agree to the contract if 7B3 is checked. The buyer is forced to decide to either agree to the incorrect requirement or not but the home. Does the seller… Read more »
Conscientious Buyer Agents; Pay attention here!!! If your Buyer Client is under contract with a Seller that is erroneously claiming an Exemption to the SD requirements (this is common with flippers and investors in the HAR MLS) and needs (or wants) to Terminate the contract but no longer has the right to terminate under the Option Period…. well this might be the opportunity! Do your due diligence first. Make sure the Seller actually does not qualify for the exemption. And terminate under the provision. And come on now…. do you believe that by Checking box 7.B.3. creates an exemption??? Only… Read more »
Where can we find the exceptions for the SDN?
It’s in the Texas Property Code 5.008(e). Here are the exceptions and a link tot the TPC (e) This section does not apply to a transfer: (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… Read more »
It’s amazing to me how many Realtors don’t understand this clearly. Plus you need to tell them the new buyer if they close assume all responsibilities of defects plus no lender will close a loan that don’t meet the four reason a seller can be exempt
Can buyer terminate a contract for reason 7.2.b
If 7.B.(2) is checked and states something like 7 days, but the seller provided the SDN 15 days after we execute, do we have 7 days from then to terminate or is it considered no delivery and we can terminate up to the closing date?
If it’s the former and we still only get the 7 days, why is there even a date requiring how soon the SDN should be received?