When selling a residential property in Texas, most sellers are required to fill out a seller's disclosure. This document helps inform potential buyers about the condition of the property, including any known issues or past damage. However, there are specific situations and exemptions where a seller may not need to complete this form. Below, we break down who can skip this step and the relevant laws that apply.
What is a Seller's Disclosure?
A seller's disclosure is a form that residential property sellers in Texas must complete to provide potential buyers with honest information about the condition of the property. The seller must disclose details such as:
- Any issues or damage to the property
- Past incidents like flooding
- Any repairs needed
This form helps buyers make an informed decision. If later it is found that the seller misrepresented the property, the seller's disclosure serves as evidence that can hold them accountable.
Who is Exempt from Filling Out a Seller's Disclosure?
Certain individuals and entities are exempt from the requirement to provide a seller's disclosure in Texas. These exemptions are specified in the Texas Property Code, Section 5.008(e). The key scenarios where a seller's disclosure is not required include:
- Commercial Properties: If you are selling commercial property, you are not required to fill out a seller's disclosure.
- Residential Properties with More than One Unit: The seller's disclosure requirement applies only to single-family residential homes. Properties with more than one dwelling unit do not need this form.
- Court-Ordered Sales: Sales mandated by a court, such as those involving a receiver are exempt.
- Estate Sales: If the sale is conducted by an administrator of an estate, the seller does not need to provide a seller's disclosure.
- Sales Between Family Members: Sales involving close family members like parents, children, or spouses, are also exempt.
- New Construction: Homes that are newly built and have never been occupied do not require a seller's disclosure.
- Land Sales with Minimal Improvements: If the value of any dwellings on the property does not exceed 5% of the total value of the land itself, a seller's disclosure is not necessary.
Why Are These Exemptions in Place?
These exemptions generally apply to situations where the seller is not in a position to know the details about the property's condition or when the buyer has a close or trusting relationship with the seller. For example, trustees, banks, or administrators of an estate may not have lived in or maintained the property, so their knowledge of its condition could be limited. Similarly, transactions between family members often operate under a higher level of trust.
Applicable Law: Texas Property Code Section 5.008(e)
The legal basis for these exemptions is outlined in the Texas Property Code, Section 5.008(e), which details specific scenarios where a seller's disclosure is not mandatory. Understanding this section of the code can help both sellers and buyers know when a disclosure is legally required and when it can be bypassed.
Conclusion
While seller's disclosures are a crucial part of most residential real estate transactions in Texas, there are several scenarios where they are not required. If you're involved in a court-ordered sale, dealing with a multi-unit residential property, or selling to a family member, you may be exempt from this requirement. Understanding these exemptions can help streamline the process and reduce potential legal complications.
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