1. legal
Who has to use a seller’s lineal line of consanguinity of one
or more of the transferors
disclosure notice? 8. between spouses resulting from a
divorce or a decree of legal separa-
tion or from a property settlement
Not every seller must, but it has its advantages. agreement incidental to such a
decree
by Dennis R. Schmidt 9. to or from any governmental
entity
10. of new residences of not more than
one dwelling unit which have not
previously been occupied for resi-
dential purposes
11. of real property where the value of
any dwelling does not exceed 5% of
the value of the property.
Use the notice as a refresher
The fact that a seller has never seen the
property or has not been to the prop-
erty for many years is not a reason for
exemption from the seller’s disclosure
requirement. Such a seller should use
the notice as an opportunity to refresh
I
s the seller required to give the purchaser a seller’s his memory about information in his
disclosure notice if the seller has never even seen files or information received from third
the property? Do the mandatory seller-disclosure parties concerning the property. It is
requirements apply to a relocation company? Do the far better to have the seller’s memory
disclosure requirements apply to a property for sale refreshed about past information con-
by owner? cerning the property and disclose it
Section 5.008(e) of the Texas Property Code states than to have that information come
that the requirements to provide a seller’s disclosure out during pretrial discovery in a suit
notice do not apply to a transfer: involving withholding information
1. pursuant to court order or foreclosure sale concerning the condition of the proper-
2. by a trustee in bankruptcy ty. A relocation company that has title
3. to a mortgage by a mortgagor or successor in inter- to the property is also not exempt from
est, or to a beneficiary of a deed of trust by a trustor the notice requirements. R EALTORS ®
or successor in interest should suggest that the relocation com-
4. by a mortgagee or a beneficiary under a deed of pany fill out the notice and attach the
trust who has acquired the real property at a sale notice they received from their employ-
conducted pursuant to a power of sale under a deed ee along with any inspection reports
of trust or a sale pursuant to a court-ordered fore- they have concerning the property.
closure or has acquired the real property by a deed
in lieu of foreclosure The notice has advantages
5. by a fiduciary in the course of the administration of for exempt sellers
a decedent’s estate, guardianship, conservatorship, Even if the seller is exempt from
PHOTO © CREATAS
or trust the notice requirement, the seller
6. from one co-owner to one or more other co-owners should review the seller’s disclosure
7. made to a spouse or to a person or people in the notice and consider the advantages
20 TEXAS R EALTOR ®
March 2007

2. of pre-offer disclosure of any infor- Listing agents beware
mation known about the condition A listing agent confronted with an owner who refuses
of the property. For example, the to complete or sign a seller’s disclosure notice should
owner of a duplex would be well- strongly consider declining the representation of that
advised to provide the notice for owner. The notice is neither long nor complicated, and
each side of the duplex even though any refusal to comply with Section 5.008 should raise
Section 5.008 only applies to sellers serious concerns about the owner’s motives. Compliance
of residential property comprising with Section 5.008 benefits all parties to a real estate
®
“not more than one dwelling unit.” transaction. Both the Texas Association of R EALTORS
and the Texas Real Estate Commission offer a seller’s
FSBO sellers disclosure notice. The TREC notice is a voluntary form
For-sale-by-owner sellers must also approved for use by licensees. Both the TAR notice and
comply with the requirements of the TREC form comply with the requirements of Section
Section 5.008. Since many FSBO 5.008. TAR recommends the use of the association’s
sellers may not be aware of the Seller’s Disclosure Notice (TAR 1406), which added pro-
notice requirements, this pres- visions to the statutory form to increase the informa-
ents an excellent educational and tion provided to buyers. Finally, the seller’s disclosure
marketing opportunity for Texas notice is a notice—not a contract. The notice should not
® ®
R EALTORS . A REALTOR ’s knowl- be part of the contract of the parties and should not be
edge of the requirements for seller’s listed as an addendum to the contract. ✯
disclosure and the availability of
the notice form could be the decid- Dennis R. Schmidt is associate counsel for the Texas Association
ing factor in obtaining a listing of REALTORS ®. This article was originally printed in the February
from a FSBO. 1995 issue of Texas REALTOR® magazine.