When it comes to the transfer of real property, buyers and sellers have divergent interests. Buyers tend to seek to get the most for their money. By “most,” we are not just talking about quantity, but quality as well. A typical buyer will seek to get the most assurances regarding the condition of the property and fixtures or appliances and the status of the title. Conversely, sellers tend to want to sell the property “as-is” or making the fewest assurances as possible to the buyer.
In Texas, transfers of residential property that occur on or after September 1, 2013 are governed by §5.008 (the “Section”) of the Texas Property Code. According to §5.008(a) of the Code, a seller of residential real property must give the buyer a written notice containing, at a minimum, all of the items prescribed in §5.008(b), which includes certain requirements contained in the Health and Safety Code.
The ultimate purpose of the Statute is to ensure that the buyer is apprised of the items contained in the property (household appliances, alarms, amenities, etc.), the condition of those items, defects or malfunctions of various structural components, and various other conditions that may affect the condition or use of the of the property, or physical health or safety of an individual.
Duty to Disclose
According to the Section, the notice shall be completed to the best of the seller’s belief and knowledge as of the date the notice is completed and signed by the seller. If the information required by the notice is unknown to the seller, the seller shall indicate that fact on the notice, and by that act is in compliance with the section.
In this context, 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 buyer, or that a reasonable investigation and inquiry would not discover. 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). Moreover, the seller’s duty to disclose ends when the notice is completed and signed; continuing updates to the notice are not required. See Bynum v. Prudential Residential Servs., 129 S.W.3d 781, 795 (Tex.App.-Houston [1st Dist.] 2004, pet. denied).
Excluded from Disclosure
The Section does not require a seller or its agent to disclose or release information related to whether a death or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, or may have had AIDS, HIV infection, or an HIV related illness.
Transfers Excepted from the Disclosure Requirement
The Seller’s Disclosure of Property Condition required by the Section does not apply to all transfers of residential real property. Subsection 5.008(e) provides that the general requirements of the Section do not apply to transfers:
- pursuant to a court order or foreclosure sale;
- by a trustee in bankruptcy;
- to a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest;
- 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;
- by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;
- from one co-owner to one or more other 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 a decree of legal separation or from a property settlement agreement incidental to such a decree;
- to or from any governmental entity;
- of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes; or
- of real property where the value of any dwelling does not exceed five percent of the value of the property.
Effect of Notice
Subsection 5.008(f) provides that , the notice shall be delivered by the seller to the buyer on or before the effective date of an executory contract binding the buyer to purchase the property. If a contract is entered without the seller providing the notice required by the Section, 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.
Oftentimes unforeseen problems arise after purchasing a home in the Dallas-Fort Worth Metro. 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 feel that a condition existed and was apparent to the seller at the time you purchased the home, contact one of our Real Estate Attorneys today.
The Texas Real Estate Attorneys at The Farah Law Firm are available to review your disclosure, assess the situation, and evaluate your situation from a legal standpoint.