Real Estate Seller Disclosures: Am I a Target? May 1, 2015

Sellers Disclosure By Richard D. Hayes

This post will discuss seller’s disclosures, a common question area in real estate sales and purchases. We will address:

  1. What disclosure is required?
  2. Why is disclosure required?
  3. What happens if I don’t disclose?
  4. Who can be liable for disclosure issues?

Texas law requires that a seller of real property provide the buyer with a disclosure of certain information. Home buyers are entitled to information about the condition of the following:

  • Appliances
  • Fireplaces
  • Security Systems
  • Windows
  • Garages
  • Pools
  • Communications Systems
  • Roofs

Sellers also must disclose termite issues, flooding issues, soil settling issues, construction issues, and lawsuits affecting the property. The full list required by law is exhaustive, and you should consult an attorney if you have any questions about your required disclosures.

Why is disclosure required?

Disclosure is required so that both the buyer and seller are all on the same page about the condition of the property. Whether the representations in the disclosure rise to the level of a warranty depends upon the specific language of your contract, and the contents of the disclosure itself. If you have any questions about the disclosure section of a piece of property you are selling or buying, you should consult an attorney.

What happens if I don’t disclose?

If a seller fails to disclose as required by the Property Code, the purchaser can back out of the deal. Specifically, if a disclosure is not provided to the buyer on or before the effective date of the sales contract, a purchaser may terminate the contract within a specified time. If you are considering terminating a contract over a seller’s disclosure you should first consult with an attorney.

Who can be liable for disclosure issues?

The most common targets for disclosure lawsuits are sellers and seller’s real estate agents. Lawsuits related to disclosures arise frequently in our part of the state, since the real estate markets in North Texas are so active. Many of these suits are brought as Deceptive Trade Practices claims, Fraud claims, or Breach of Contract claims.

  • Deceptive Trade Practices Act Claims – These claims, commonly referred to as DTPA claims, are especially appealing for potential plaintiffs in a seller’s disclosure case. The Deceptive Trade Practices Act was passed by the legislature as a way to protect Texas consumers from certain types of actions deemed deceptive. The DTPA allows successful plaintiffs to be rewarded three times the amount of their damages, if certain procedures are followed throughout the lawsuit. Because of these harsh penalties it is imperative that you speak with an attorney early in a DTPA dispute. There are specific tools available to an attorney to help reduce the risk of an expensive award against a seller.
  • Fraud – These claims can arise where a buyer accuses a seller of lying to deceive the buyer. If a seller or seller’s real estate agent lies on the seller disclosure form a fraud claim may be brought. For this reason it is a good practice to communicate in writing during a real estate deal. Also, when in doubt, a seller would be well served to take a conservative approach and disclose, disclose, disclose!
  • Breach of Contract – These claims are brought where one party believes someone else didn’t live up to their end of a deal. In a seller’s disclosure setting, a plaintiff may claim that the disclosure is a part of the contract, or that one of the warranties contained within the contract was breached. These claims are attractive to plaintiffs because, as long as certain steps are taken, they may be able to recover their attorney’s fees from an unsuccessful defendant.

If you are concerned about a seller’s disclosure issue related to a sale or purchase you made, please contact us today to discuss your matter.

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