Practically Speaking

Q. The listing agent says the seller does not have to fi ll out a seller disclosure because the seller has not lived there in the last three years. Is that true? A. No. This is a common misconception. The Texas Property Code has 11 exceptions to the seller disclosure law. Not living in the home is not one of those exceptions. Q. I represent an heir to a property. Does she have to give a buyer a Seller’s Disclosure Notice? A. It depends. If the property is sold during estate administration by the executor, the answer is no because the executor is exempt by law. If the property is sold after the estate is probated and title has transferred to your client, then the answer is yes.

What the Law Says

The Seller’s Disclosure Notice is required when transferring residential real property with only one dwelling unit except: • pursuant to a court order or foreclosure sale; • by a trustee in bankruptcy; • to a mortgagee by a mortgagor or successor in interest, or to a benefi ciary of a deed of trust by a trustor or successor in interest; • by a mortgagee or a benefi ciary 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 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 fi duciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

Jolene has a listing appointment with a seller who is an investor and has never lived in the home. At the appointment, she gives the seller an Information About Brokerage Services form, a listing agreement, and a seller disclosure form, and explains the need for each document. The seller pushes back on the seller disclosure form. He insists that he does not have to fi ll this out because he never lived in the property. Jolene assures him that in Texas this is required and “not having lived there” is not an exception. The seller says he bets he

All agents should know what the law says about when a seller’s disclosure form is required or not. Brokers should train agents on this. Keep in mind, all sellers and license holders must • from one co-owner to one or more other co-owners; • when made to a spouse or to a person or persons in the lineal line of consanguinity (kinship) 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; • for a new residence of not more than one dwelling unit that has not previously been occupied for residential purposes; or • for real property where the value of any dwelling does not exceed 5 percent of the value of the property [Texas Property Code §5.008(e)].

disclose all knowledge about a material defect with the property, whether a Seller’s Disclosure Notice is required or not, or they could be sued under the Deceptive Trade Practices Act.

For Example

can fi nd an agent who won’t make him fi ll out this silly form. Jolene has been in the business for a long time, and she knows when things start out in a negative way, they will likely get worse, not better. Jolene politely tells the seller, “Perhaps I am not the right agent for you.” The seller changes his tune because he knows she is the top listing agent in the area. He apologizes for his behavior and promises to get out his fi le on the property and fi ll out the disclosure based on the reports from his property manager.

Best Practice

Nothing in this publication should be construed as legal advice for a particular situation. For speci c advice, consult an attorney. Lewis (kerrilewis13@gmail.com) is a member of the State Bar of Texas and former general counsel for the Texas Real Estate Commission (TREC). Wukasch (avis@2oldchicks.com) is a broker and former TREC chair.