Selling a Texas Home: What Are My Disclosure Obligations?

Texas law requires that you, if you're selling a home in the Lone Star State, make certain disclosures to the prospective buyer about the property's condition before the closing. The purpose is to reveal various physical and other problems with the property that could affect its value or desirability. What must you disclose to prospective buyers, and when?

Disclosure Laws in Texas for Home Sales

Seller disclosures in Texas are governed by Texas Property Code Section § 5.008 (1983). This statute says that sellers of single-unit residential real property must give purchasers a written notice containing their knowledge of the condition of the property. The statute sets forth language that should be on that form, focusing on material defects.

That language has been incorporated into a standard form created by the Texas Real Estate Commission (TREC), a state agency charged with overseeing the real estate market.

This form must be delivered to the buyer "on or before the effective date" of the property purchase contract. In other words, you cannot have the buyer become bound by the purchase contract and then, say, a week later, hand the buyer a disclosure form saying that the electricity in the house does not work. Obviously, this sort of material defect could influence a buyer's decision about the transaction, or at least the offer price.

If you fail to deliver the disclosure form pre-contract, the buyer may terminate the deal within seven days of receiving it from you. Given all of the stresses involved in selling your home, you do not want to create this additional layer of uncertainty.

Both you and the homebuyer will sign the disclosure form, as proof that it has been given and received. (Obviously, you should retain a copy for your records.)

Who Is Exempt From Filling Out the Texas Disclosure Form?

Certain types of sellers need not fill this form out, usually because they've never lived in nor been responsible for the house. This includes, for example, when the transfer is being made per a court order or foreclosure sale, by a trustee in bankruptcy, by the administrator of a dead person's estate, guardianship, conservatorship, or trust, from one co-owner to others, between spouses or close family, between spouses after a divorce decree or property settlement, and y where the value of the house is 5% or less of the value of the property (in other words, it's falling apart).

What Defects Does the Texas Disclosure Statement Cover?

Before considering the specifics of what the Texas disclosure form covers, it is useful to remember what the form does not cover. Importantly, it only needs to be filled out "to the best of seller's belief and knowledge" as of the signing date.

This means that you are not required to conduct any independent inspections of your property, or hire an engineer or professional inspector to verify its condition or turn up problems you yourself couldn't see. On the form, one of your options for answering questions is to say "unknown."

The statute also specifically excludes certain information from required disclosure. You have no duty to disclose information related to whether the property has been the site of "a death by natural causes, suicide, or accident unrelated to the condition of the property," nor whether a previous occupant had or might have had AIDS or HIV or related illnesses. The purpose of this is to protect privacy and prevent buyers from making decisions based upon irrelevant information about prior owners of the property.

Now let's turn to what is on the form. TREC's form starts by asking whether the seller is occupying the property. If you're not, and do not fit any of the exceptions above but are renting it out, you are still expected to fill out this form.

Next, the disclosure form asks you to check whether your property has specific elements: for example, central air conditioning, an oven, a pool or sauna, attic fans, fuel gas piping, or a satellite dish. It then asks you to explain in detail whether you are aware of any "known defects" with the elements you have identified. Several questions contain prompts to enter "other" defects, to make sure you don't overlook anything.

You are also asked to disclose whether you are aware of any prior problems or repairs to particular aspects of the property. Is there a history of termite infestations or treatment? Previous structural damage? Evidence of radon gas or other hazardous or toxic substances? Meth production? These are the sorts of potential issues about which a buyer would want to know before signing a purchase contract.

And the questions go beyond physical matters. The form will ask whether any lawsuits affect the property, whether there's a homeowners' association that will charge maintenance fees or assessments or offer co-ownership of "common areas" such as pools, tennis courts, walkways, and so on, and more.

Remember, though, that you need only disclose information that you personally know. Thus, if you have no reason to believe that the home contains asbestos, you don't need to hire an inspector to find out for sure before submitting the form. (The prospective homebuyer has every right to do this, however, but at personal expense.)

Federal Guidelines Require Lead Disclosures in Real Estate Transactions

A few federal regulations also govern real estate disclosures in every state. For example, if your home was built prior to 1978, you must disclose any known existence of lead-based paint. (The federal lead disclosure requirements are found at 42 U.S.C.A. §§ 4851-56.)

According to the Environmental Protection Agency (EPA), you must also provide an EPA-approved pamphlet addressing lead-based paint hazards. Further, you must include language in the real estate contract entitled "Lead Warning Statement" declaring that you have met all notification requirements.

Why Should You Be Honest and Open in Making Disclosures About Your Texas Property?

All of these disclosures might seem to make life more complicated, since they force a Texas homeowner to confront potentially value-diminishing aspects of the property. Is there any real, practical reason to be open and honest in making these disclosures?

Imagine that you sell your suburban home outside of Dallas, and neglect to mention on your disclosure form that a massive termite infestation is eating away at the base of the home. Inevitably, the buyer discovers the issue and realizes that the cost of exterminating the critters and remediating the home's foundation will be substantial. The buyer might sue for breach of contract or fraud.

Consider another scenario. You do not disclose the termite infestation history before the purchase contract is signed. Before closing, the buyer hires an inspector, who immediately finds the termites. The buyer realizes that you failed to disclose the issue, loses trust, then backs out of the contract.

In either case, the buyer's eventual "surprise" will only make your life more difficult. As a Texas home seller, honesty on your disclosure form tends to be the best policy.

For More Information About Texas Home Disclosures

If you can't decide what makes sense, legally or practically, to disclose about your Texas home, talk to your real estate agent or an attorney.