Seller Duty to Disclose in Texas (TREC Seller Disclosure)
Buying a home is a stressful and often overwhelming experience. Besides wading through the financial and legal fine print, buyers often experience nagging doubts about whether the ultimate purchase is the right thing to do. After all, buying a house is the biggest financial investment most people will make in their lives. The last thing anyone wants to happen is to spend hundreds of thousands of dollars only to discover some significant problem with the house after the papers have been signed and payments transferred. Thankfully, Texas law offers at least some comfort to home buyers by protecting them from unscrupulous sellers who might try to hide problems with the property. Continue reading to learn about seller disclosure requirements in residential real estate transactions, and call a Houston real estate attorney with additional questions or for help with a Texas real estate matter.
What is a Residential Real Estate Seller’s Duty to Disclose?
Sellers of residential real estate are required to disclose certain facts about the home to a potential buyer before selling. Pursuant to Section 5.008 of the Texas Property Code, most home sellers are required to fill out a Seller’s Disclosure form. According to the Property Code:
A seller of residential real property comprising not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice as prescribed by this section or a written notice substantially similar to the notice prescribed by this section which contains, at a minimum, all of the items in the notice prescribed by this section.
Any seller who is selling a single-family home is required to either fill out the specific form provided by the Texas Real Estate Commission (TREC) or submit a written notice covering all of the same topics as the TREC Seller’s Disclosure form. The purpose of the disclosure is to ensure that buyers are aware of any potential issues with the house they are buying, including a historical account of the home to warn of potential latent or future problems.
If a seller fails to provide a Seller’s Disclosure within the timeframe set by the sales contract, the buyer can terminate the sale without facing any cancellation/breach penalties or other financial ramifications. The seller must make the disclosure to the best of their “belief and knowledge,” meaning they do not have to disclose defects about which they are unaware.
What’s in a TREC Seller’s Disclosure?
The TREC Seller’s Disclosure, available on the TREC website, identifies known features and defects of the property being sold. The seller must disclose known defects or malfunctions in various parts of the property (walls, roof, floors, doors, driveways, electrical systems, etc.) and identify any other problems which might pertain to the property (termites, asbestos, previous fires, lead paint, etc.). The form also covers insurance coverage, previous flooding, other ownership or use interests in the property, fees, regulatory matters, and other issues (homeowner’s fees, lawsuits affecting the property, building code violations, etc.). If the seller knows of any defects or other issues, they must explain the issue fully to the buyer before sale.
TREC Disclosures Are For Single-Family Homes Only
The Property Code makes it clear that the Seller’s Disclosure form is required only for single-unit homes. The section does not apply to duplexes, apartment complexes, commercial real estate, or other properties being sold. However, even though sellers of other types of property do not have to provide the specific statutory disclosure identified in Section 5.008, they must still adhere to other principles of contract and property law. Namely, sellers must still disclose known material defects concerning the property being sold. Failure to do so can give buyers the right to rescind the sale and possibly pursue additional damages for financial costs incurred in reliance on the seller’s bad faith representations or omissions.
Exceptions to Disclosure Requirement
As noted, the Seller’s Disclosure is only required for the sale of single dwelling unit properties. Additionally, the Disclosure is not required for transfers other than sale and does not apply to other transactions including transfers:
- Pursuant to court order or foreclosure sale
- Via bankruptcy
- To a mortgagee by mortgagor or successor in interest
- From one co-owner to another co-owner
- Made to a spouse or relative
- To or from a governmental entity
The Property Code includes a number of additional specific exceptions. If your transaction does not involve a typical real estate buyer and seller, with a sale conducted at arms’ length, your transaction might not require a TREC Seller’s Disclosure. Talk to your Texas real estate attorney for details about required disclosures.
If you need legal assistance with a Texas real estate matter, contact the dedicated and detail-oriented Texas real estate lawyer at the Houston offices of attorney Leigh Meineke at Stephens | Domnitz | Meineke PLLC by calling 832-706-0244.