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When Buying or Selling a Home, Pay Attention To The Seller’s Disclosure Notice

In Texas, transfers of residential property that occur on or after September 1, 2013 are governed by Texas Property Code Section 5.008. According to Texas Property Code Section 5.008, a seller of some residential real property must give the buyer a written notice containing, at a minimum, all the items listed in Section 5.008.

The disclosures required by Section 5.008 include (1) the presence and condition of equipment, fixtures and improvements; (2) the presence or absence of working smoke detectors; (3) defects in walls, foundations, plumbing, electrical, or other major components of the property, including “structural” components; (4) potential problems with termite damage, flooding, aluminum wiring, asbestos, or lead-based paint; (5) whether any item, equipment, or system is in need of repair; and (6) other items affecting the property such as alterations or repairs made without permits or non-compliance with codes, deed restrictions, common areas, and lawsuits.

The notice must be completed to the best of the seller’s knowledge and belief as of the date of completion and signature. If the information required is unknown to the seller, the seller must indicate that fact on the notice. A Texas Appellate Court in Dallas, Texas clarified that actual knowledge by the seller of the condition or defect is required for a seller to have a duty to disclose. That court stated that “a seller is under a duty to disclose material facts that would not be discoverable by the exercise of ordinary care and diligence by the purchaser, or that a reasonable investigation and inquiry would not uncover. But a seller has no duty to disclose facts he does not know” See Myre v. Meletio, 307 S.W.3d 839, 843-44 (Tex.App.-Dallas 201, pet denied).

The notice must be delivered by the seller to the buyer on or before the effective date of a contract binding the buyer to purchase the property. If a contract is entered without the seller providing the notice required, the buyer may terminate the contract for any reason within seven days of receiving the notice. This termination can be combined with other actions that may arise under other statutes as a result of the acts or omissions of the seller.

The Seller’s Disclosure of Property Condition required by the Texas Property Code Section 5.008 does not apply to all transfers of residential real property. This does not apply to transfers that are:

1. pursuant to a court order or foreclosure sale;

2. by a trustee in bankruptcy;

3. to 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 as a sale conducted pursuant to a power of sale under a deed of trust or a sale pursuant to a court ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;

5. by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

6. from one co-owner to one or more other co-owners;

7. made to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;

8. between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to such a decree;

9. to or from any governmental entity;

10. of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes; or

11. of real property where the value of any dwelling does not exceed five percent of the value of the property.

At times, unforeseen problems arise after purchasing a home and many times the defect or condition is not noticed by the buyer until many months after the purchase is made. If you are concerned with a real estate condition disclosure and believe that a condition existed and was apparent to the seller at the time you purchased the home, contact us today to review your disclosure, assess the situation, and evaluate your potential legal matter.

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