As the prospective buyer of a home in Texas, you no doubt want to know how much the seller is obligated to tell you about the place. Fortunately, Texas law requires sellers to give buyers a written notice with information about what the seller knows about the property’s condition. The seller is likely to meet this obligation by filling out what’s known as a Seller’s Disclosure of Property Condition.
More than one version of this form is available. The Texas Real Estate Commission has created a form called ”TREC OP-H,” which contains the minimum information required by the statute. The Texas Association of Realtors has issued a more detailed form, however, requiring additional disclosures from the seller. (See TAR Form 1406.) The TAR Form 1406 is not made directly available to the public but you can view various proprietary versions via an online search.
In preparing your offer to purchase, including a contract term requiring the seller to use the TAR form is a good way to get the maximum information possible. The contract will require the seller to provide the disclosure within seven days after you've both signed the contract.
A seller of residential real estate in Texas must, under state law, disclose what the seller knows about the condition of the property. (See Texas Property Code Section 5.008.) This includes conditions known to the seller that would not be discovered by the purchaser making reasonable investigation of the property. A seller bears the responsibility of being truthful in making these disclosures.
The seller’s disclosure obligations obviously leave out anything that the seller doesn’t know about — especially important when you also realize that sellers aren’t obligated to investigate or inspect their houses prior to filling out the disclosure form. So, for example, a seller who never used the hot tub would be within his or her rights to say, on the form, that he or she was not aware of any malfunction in the hot tub drain — despite the fact that the drain might not work at all.
Also, the seller has no legal obligation to disclose information related to whether a death by natural causes, suicide, or accident unrelated to the condition of the property has occurred on the property, nor whether a previous occupant may have had any illness related to AIDS or HIV.
Another limitation to be aware of is that the seller does not have to disclose what has occurred to other houses in the neighborhood. Sometimes houses in a neighborhood suffer similar defects. For example, sewage systems may have been installed at the same time for an entire neighborhood. Other homes in the neighborhood may have suffered some type of sewage system failure while the seller is not aware of any similar defect in his or her home. You could ask other homeowners in the neighborhood about the expenses they have faced or visit the city’s property inspection department and ask what repair permits have been issued for local homes.
Using the Seller’s Disclosure of Property Condition, the seller first identifies the appliances and other systems present on the property. The seller then discloses any appliance or system that is not in working order and describes what the seller knows about the dysfunctional appliance or system.
Under Section 2 of the Disclosure form (TREC version), the seller provides information about the smoke detectors on the property.
Under Section 3, the seller discloses any defect in the structural condition of the property including the foundation, frame, electrical system, plumbing system, and heating and air conditioning systems.
Under Section 4, the seller discloses matters such as hazardous conditions, foundation movement, termite infestation, flooding, improper drainage, presence of asbestos, presence of radon gas, presence of lead based paint, or presence of aluminum wiring. A seller must also disclose whether anyone has ever manufactured methamphetamines on the property.
Under Section 5, the seller discloses any repairs that the property needs.
Under Section 6, the seller discloses various legal or permitting-related matters, including whether the property is subject to a homeowners’ association and the amount of dues; and any condition that is in violation of homeowners’ association bylaws, building codes, or other law or regulation, such as a room addition that was made without compliance with municipal building ordinances.
Under Section 7, a seller advises a buyer in the coastal region to take additional steps to learn what specific building restrictions apply to the property.
The TAR form, called a Seller’s Disclosure Notice, is arranged in a different format, but requires all of the same disclosures as identified above. In addition, the TAR form asks for more details about the appliances on the property, asks about any prior inspection reports, asks about current property tax exemptions being claimed by the seller, and asks about any insurance claims the seller has made.
First, make sure the Seller’s Disclosure of Property Condition is properly dated and signed by all sellers, so that it is legally binding on the sellers.
Next, make sure the seller answered every question. If the seller leaves any part of the Disclosure blank, you should be concerned. Have your real estate agent or attorney request that the seller complete the form.
Your most important step is to read the seller’s descriptions of the property features, conditions, hazards, and defects. The seller should have answered only either “yes” or “no” to the questions in Sections 3 and 4 of the disclosure. Unlike in Questions 1 and 2, an “Unknown” answer is not an option in either Section 3 or 4,and you should not accept this answer there.
A careful reading of the disclosure form will likely show you what items or issues you need to investigate further. For example, let’s say the seller informs you that the home has cable TV wiring. To follow up, you'd want to find out where the wiring enters the home and whether it’s available in just one room or in multiple rooms. Or, if the home has a swimming pool, you’d need to find out whether the pool complies with the most recent building codes and, in the event that it needs repairs, whether you will have additional expenses to bring the pool into compliance.
Also realize that an item that’s old but still functioning is not considered to have a “defect” requiring disclosure. So, if the home has a functioning garage door opener, the seller does not have to disclose any more information about it, even if it’s 20 years old. You might want to ask for such information, at least to find out what your most likely upcoming expenses of home ownership will include.
As to each appliance, you are within your rights to ask the seller for follow-up information, such as whether it was professionally installed or installed in a “do-it-yourself” project and whether the appliance or the installation has any remaining warranty to pass on to you.
Another important consideration in the purchase of an existing home is the roof. Even though a roof has not leaked, it may be old and in need of replacement. Find out the age and condition of the roof and consult with your insurance company about the scope of coverage you will need in the event the roof must be replaced.
Keep in mind, as you review the form, that the disclosure is like a picture. It is given at a single point in time. If you’d like more information about the house’s condition in the past, ask the seller for a copy of the disclosure provided to him or her upon buying the property. As for the present, realize that the seller has no statutory duty to provide an updated disclosure if the process of closing the sale is delayed for any reason. To gain a little extra protection, you can ask for the purchase contract to include a contractual duty for the seller to provide an updated disclosure if any significant delay in closing occurs.
Look upon the Texas Seller’s Disclosure of Property Condition as your first step in evaluating the property. For the reasons described above, it won’t tell you everything. If a seller has neglected to disclose, for example, foundation movement, you’re not likely to notice it on your own. Hiring a professional home inspector will be crucial in turning up defects that the seller either didn’t know about or didn’t reveal.
Buying a home requires a major financial obligation and involves many legal rights and duties. Never rely solely on the Seller’s Disclosure of Property Condition in making this decision, but instead take a careful look at the place when you visit, and condition your purchase on a home inspection. If you have questions, a Texas attorney can help you understand the contracts and review the seller’s disclosures.