Understanding the Sellers Disclosure

What if a seller’s disclosure is incorrect? Does a seller have to disclose a death on the property? If there has been an inspection, must a seller share that with potential buyers?

The Seller’s Disclosure is one of many forms available for sellers to document the condition of a home and share with buyers. The disclosure serves as information to potential buyers and a risk-reduction tool for sellers. In Texas, the Seller’s Disclosure of Property Condition promulgated by the Texas Real Estate Commission (TREC) covers the state minimum for disclosing. Some listing agents provide their sellers with the Seller’s Disclosure Notice prepared by the Texas Association of Realtors (TAR) because it requests additional information from the seller that may be beneficial to a potential buyer.

A Seller May NOT Have to Provide a Seller’s Disclosure if they fall into one of eleven categories. For example, a seller that is selling a duplex might not provide a formal disclosure as only single family dwellings are required to have accompanying disclosures from the seller. A bank that acquires a home during foreclosure may not provide a seller’s disclosure either. New construction homes will not typically come with a seller’s disclosure as the home really hasn’t any history. Also, the trustee or executor of an estate will not be required to provide a seller’s disclosure on any home from the estate that are on the market.

The Seller’s Disclosure Must be Completed to The Best of The Seller’s Belief and Knowledge as of the date of signature. This is important because a seller that has never lived in a home, such as landlord investor or a family member that inherited the home, may have very limited knowledge of the condition. However, in Texas, not living in a home isn’t excuse enough for not having any knowledge; information about the home can be obtained in many ways, such as from tenants or property managers. A seller should note on the disclosure if any information required is unknown to the seller. A seller is also not required, in Texas, to update a disclosure form if new information becomes available, although it would be good idea. Even if a seller elects to not update the disclosure form, they are still legally required to disclose the condition of the home to potential buyers, in accordance with property code. Since the disclosure is only completed to the best of the seller’s knowledge, is not required to be updated, and could possibly have some incorrect information, it would be prudent for a buyer to double check anything important to their decision making process.

A Seller May NOT Be Required to Disclose Deaths on the Property if the death was due to natural causes, accident or suicide and unrelated to the condition of the party. Murder is not protected in this instance and must be disclosed; although, not in great detail. Additionally, a seller does not have to disclose if a previous occupant had, may have had, has, or may have HIV, AIDS or an HIV related illness. A seller is also not required to disclose their knowledge of a registered sex offender living nearby. Although, as this is something a buyer will likely unearth and could result in a change of heart, it might benefit the seller to disclose upfront.

A Seller Should Include Recent Inspection Reports, but it is not required. The TAR Seller’s Disclosure Notice inquires if any inspections have been conducted in the past 4 years and requests that they be included with the disclosure. While a seller is not required to share inspection reports with potential buyers, a seller IS required to disclose any new information regarding the condition of the home, in accordance with property code.

Review all information presented in the MLS, Seller’s Disclosure and Association Documents in detail. Consult a real estate attorney (and your REALTOR) if something appears missing, incorrect or is difficult to understand.