Real Estate Exam [Texas] 18, Seller's Disclosure Exemptions

0:00We are tackling the specific exemptions to the seller's disclosure notice requirement, a critical topic for the Texas real estate exam. The exam will expect you to know precisely when a seller is not obligated to provide this form. These exemptions are detailed in the Texas property code and often involve situations where the seller has limited or no firsthand knowledge of the property's condition. Let's break down the most common scenarios you'll see on the test. First are sales that are involuntary from the owner's perspective. This includes foreclosure sales, court ordered sales, and sales by a trustee in bankruptcy. In these cases, the seller, often a bank or a court-appointed individual, has never lived in the property and can't attest to its condition. Similarly, sales by a fiduciary in the course of administering an estate, guardianship, or trust are also exempt. Think of an executor selling a deceased person's home. The law doesn't expect them to have intimate knowledge

1:01of its history. Another major category involves transfers between related parties. This includes transfers between spouses, such as in a divorce settlement, or from a parent to a child. The exam assumes these parties have existing knowledge of the property, making a formal disclosure unnecessary. The same logic applies to transfers between co-owners of a property. At key exemption, you must remember is for new construction, a builder selling a new home that has never been occupied for residential purposes does not need to provide a seller's disclosure notice. The exam loves to test this. Be careful with trick questions. For instance, if a builder takes a trade-in and then sells that used home, the exemption for a new home would no longer apply. A frequent point of confusion on the exam is the difference between selling a property as is and being exempt from disclosure. And as is clause does not relieve a seller of their disclosure duty. If a seller is not exempt, they must provide the notice,

2:02even if they are selling the property as is. The as is clause simply means the buyer agrees to take the property in its current condition. But they are still entitled to know what that condition is based on the seller's knowledge. Another common exam trap involves the agent's responsibilities. Even if the seller is exempt from providing the disclosure notice, the real estate agent is not exempt from their duty to disclose any known material facts about the property. For example, if the sale is in a state sale and the seller is exempt, but the listing agent knows the roof leaks, the agent must disclose that fact to help remember the core exemptions, use the phrase, courts, kin, and construction. This covers court-ordered sales, transfers to family or co-owners and new homes. These categories account for the majority of exemption scenarios you'll face on the Texas exam. For free practice questions, AI-powered explanations, and more exam prep tools, visit openexamprep.com.

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