Ask George and Chuck The experts offer follow-up to seller’s disclosure query

December 22, 2017 GMT

Q: This question continues from last week. It is repeated here:

“I am a real estate broker with a question regarding seller’s disclosures. Is an investor/seller offering seller financing exempt from providing a seller’s disclosure? A title company advised us that since the investor/seller is the mortgagee holding the lien, he is exempt because he is a lienholder. I think this is incorrect. Is the title company referring to Par. 7e(3) of Sec. 5.008j Seller’s Disclosure of Property Condition of the Texas Property Code? I have copied it below for your reference.

(e) This section does not apply to a transfer:

(1) Pursuant to a court order or foreclosure sale;

(2) By a trustee in bankruptcy;

(3) To a mortgagee by a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest.

(Previous answer): We don’t have enough facts. If it wasn’t a foreclosure sale, (e)(1) would not apply. If there was no trustee in a bankruptcy, (e)(2) would not apply. If the transfer is to the lender by the borrower, (e)(3) might apply, but we’d have to inquire and make a decision based on their response.”

A: In our opinion, 7(e)(3) applies to a deed in lieu of foreclosure or a mortgagor purchasing at a foreclosure sale. The long history of seller disclosure forms has very few exceptions. A seller financing would not abrogate this duty.

Q: I’m a real estate broker. I have a client that is absolutely refusing to sell her home to a buyer because of the home buyer’s religion. It is a very good offer and I don’t understand this at all. She claims she can discriminate because the Fair Housing Act doesn’t apply to her. What do I do?

A: Get out of this deal now. The Fair Housing Act does apply to real estate brokers, and the U.S. Constitution’s Fifth Amendment applies to everyone. There is nothing but trouble here if your potential home buyer chooses legal alternatives.

Q: I’m buying income-producing property. I have a commercial broker who is working as a buyer’s agent. He has provided the list of leases and cash flows on the project. How can I confirm these are correct?

A: The broker is most likely providing you what the seller has provided to him. He is not verifying that these figures are true and correct. If he has personal knowledge, have the broker confirm them. If he does not, get estoppel certificates from the tenants, have an auditor check the figures, and have the seller swear that the numbers are true and correct at the closing. You can never ask enough questions, and if the seller is resistant in their answers, there are other deals out there.

Q: My mother left me her house when she died. My wife wants me to sell the house, so we can invest the money in something else. I’m not against this, but none of this money is hers, is it?

A: In a word, “no.”

To send a question visit and select the “Ask A Question” button. Our answers to questions do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney. George Stephens is the broker of Stephens Properties. Charles J. Jacobus, J.D. is Board Certified by the Texas Board of Legal Specialization in Residential and Commercial Real Estate Law.