When is a home seller exempt from providing a seller’s disclosure to a buyer? Let's discuss.

 

When is a seller exempt from providing a seller’s disclosure? Those who brought this question to us also provided specific circumstances in which a seller failed to give them a disclosure. 

For example, one seller had listed their home in as is condition and refused to provide the buyer with a disclosure. Another seller hadn’t even lived in the property they were selling; it was an investment property and they didn’t have enough first-hand knowledge of the property’s history to provide a disclosure. Most recently, a seller was selling their property to the tenants who currently lived there, saying that the tenants know more about the home than they did themselves.

Are any of those legitimate excuses for not providing the buyer with a disclosure? Absolutely not.

The Texas Property Code identifies 10 circumstances in which a seller doesn’t have to provide the disclosure, which I’ve summarized in four categories: 

1. Death. If the property is being transferred through the probate process or via a will, no disclosure is required.

2. Debt. If foreclosure or bankruptcy brought on by debt triggers the transfer of the property, no disclosure is required.

3. Divorce. If a property is transferred from one spouse to another during a divorce, no disclosure is required. Similarly, if the property is being transferred along close family lines (even without a divorce), then no disclosure is required.

4. Dwelling. If the property is brand-new or its value is less than 5% of the value of the property being sold, no disclosure is required. Suppose that the property is a 200-acre ranch. It’s a prime property on prime land, but there’s a little shack on the property that doesn’t contribute much value at all. If that structure is less than 5% of the value of the total property being sold, then no disclosure is required.

If you can keep these four factors in mind, you’ll be in a great position to counsel your buyers and sellers about seller’s disclosures.

I love to help agents navigate these tricky issues, so if I can ever do anything to help you, feel free to reach out to me. I’m here to help!