What are Seller Disclosure laws for Home Sales in Texas?
What is a Seller’s Disclosure
In Texas, a seller of residential real property must give written notice of all the defects in the property to the buyer. This is a seller’s disclosure.
A disclosure is made with a disclosure form presented to the buyer at closing. A sample form from the Texas Real Estate Commission website can be found here. It has to list all condition of all the items on the property and whether there are any defects on the property.
A seller relieves himself of future lawsuits if she makes all disclosures. A buyer has limited remedies against a seller who has disclosed all defects of the property. Buyer cannot sue the seller for fraud or misrepresentation if seller discloses.
What if I knowingly fail to admit defects to my property?
That could be bad! It could result in the collapse of the transaction later on in the process or could result as a lawsuit being filed against you for knowingly and willingly misrepresenting information for a financial benefit.
You can be sued for fraud in a real estate transaction and the buyer can get an award of exemplary damages. These are essentially money damages awarded to buyer, to punish the seller, and can be over three times the price of the house.
What should I disclose to the buyer?
Here are some items disclosed by seller:
Defects related to the building’s structure – E.g use of lower-quality concrete or building materials.
Flood Warning – E.g. house is on a flood plan.
Working conditions of HVAC Systems
Cosmetic Damages to the building – the wear and tear of the building.
Lead paint warnings – sellers must reveal if the home has (or could have) lead paint deposits or on walls.
Smoke detector certificates – the home has the right number of smoke detectors per room and the permits are updated.
A disclosure form is generally very long and detailed.
Can I be penalized if I am not aware about the defects?
No, the law requires you to answer to the best of your abilities. It does not force you to hire an inspector or engineer to evaluate your house before sale.
What if a realtor deceived me about defects related to the house I bought?
The realtor could face a penalty of $10,000 and/or three times the value of the repairs to the buyer.
Is a Disclosure the same thing as an Inspection?
No, a disclosure is not the same thing. An inspector is hired to conduct an inspection of the condition of the property. He/she tells the buyer if there are any defects on the property. The seller may not be aware of those defects.
A disclosure is a seller’s disclosure of defects that the seller is aware of.
E.g. Seller S was living in the home from 2000-2020. He is now selling the house. The house flooded during Hurricane Harvey and S made a FEMA claim to repair the house. S would have to disclose this to the buyer in the disclosure form. E.g. 2: Same seller S. He has been on the property over 20 years. His roof needs repairs but he does not know because he has not checked his roof in 10 years. The buyer hires an inspector who determines that the roof is of bad condition and needs repairs. S was not responsible for disclosing it in the form because S did not know the roof needed repair.
What is the “As Is” Clause?
“As Is” Clause instructs the buyer to purchase the property the same way it is. It could be because the seller does not know a lot about the property or wants to avoid liability in future. It could be of as a result of known issues the buyer does not want the seller to know of.