Sellers Disclosure Obligations

RealtorĀ® Legal Tip – Negligence lawsuit in Texas – Seller Disclosures was the issue.

In a recently litigated and still pending lawsuit in Texas, a buyer is suing the listing broker and their own agent/Team for fraud, deceptive trade practices, negligent misrepresentation and failure to use reasonable care and diligence.

Here’s what happened. The buyers purchased a property and afterward discovered improper drainage and learned the property had experienced flooding for years. The sellers told the buyers they had disclosed the history of flooding to their listing broker and that the listing broker himself filled out the seller disclosure form. Several of the boxes were left unmarked on the disclosure form. The buyers representative which was a Team didn’t advise the buyer that the form had not been fully filled out. In addition to naming the listing broker as a defendant, the buyers also named their representative (the Team) for failure to use diligence and care in representing them and for negligently failing to advise them that the seller disclosure form was not properly filled out.

The case has been remanded to a trial court to determine liability.

Here’s what you should get out of this case:

1) The listing broker should NEVER fill out the seller disclosure form.
2) The buyers agent should review the seller disclosure form to determine that it has been completely filled out.
3) Sellers must disclose material defects that affect the value of the property. See section 10.3 of the REPC.
4) The listing broker/agent has the same duty as the seller to disclose material defects.
5) This type of case is very common so try to avoid it and explain the importance of the seller disclosures to your seller.

Courtesy: Curtis Bullock

Salt Lake Board of Realtors