Texas Real Estate Disclosure Laws: Seller Duties and Penalties

Texas real estate disclosure laws require sellers of used single-family homes to give the buyer a written Seller’s Disclosure Notice covering known defects and property conditions before the purchase contract becomes binding. Section 5.008 of the Texas Property Code sets out what belongs on the form and what the buyer can do if the seller delivers it late or not at all, including a seven-day right to walk away from the deal.¹ Sellers who conceal known problems can be sued under the Texas Deceptive Trade Practices Act, with exposure to triple damages plus the buyer’s attorney’s fees.

What Texas Sellers Have to Disclose

The notice is a standardized form the seller fills out based on what they actually know. There is no duty to hire an inspector or dig for hidden problems. But “I never checked” is not a defense once a court decides the seller had reason to know.

Physical condition questions cover the foundation, walls, basement, driveways, sidewalks, fences, and any previous structural or roof repairs. The form asks about the roof’s type, approximate age, and repair history, and about the central air conditioning, heating, plumbing, septic, and electrical systems, including whether aluminum wiring is present. Past fires, water damage that wasn’t caused by flooding, and termite or wood-rot damage each get their own line, along with any prior treatment.¹

Environmental hazards make up their own block: asbestos, lead-based paint, radon gas, urea formaldehyde insulation, and whether the property was ever used to manufacture methamphetamine.

The notice also captures legal and financial facts a buyer can’t spot on a walk-through:

Homeowners’ association membership, maintenance fees, and any special assessments
Notices of deed-restriction violations or code violations
Any lawsuit directly or indirectly affecting the property
The source of the water supply — city, well, co-op, or a municipal utility district

If the home sits inside a MUD or similar special taxing district, that has to be flagged because it affects the buyer’s tax bill.¹

Flood History

After Hurricane Harvey, the Legislature expanded the flood section of the notice through SB 339, effective September 1, 2019.² Sellers now have to say whether the property lies wholly or partly in a 100-year floodplain (a Special Flood Hazard Area), a 500-year floodplain (a Moderate Flood Hazard Area), or a floodway, flood pool, or reservoir managed by the U.S. Army Corps of Engineers.

Beyond location, the form asks whether water has ever penetrated a structure on the property from a natural flood, whether the property has flooded due to a reservoir breach or controlled release, and whether the seller currently carries flood insurance.¹ A separate question asks whether the seller has ever received flood-related disaster assistance from FEMA or the Small Business Administration, and if so, requires an explanation.² That last one matters: a home repaired with federal money after a flood may show no visible damage today, but the buyer still needs to know.

Lead-Based Paint for Homes Built Before 1978

For any home built before 1978, federal law adds a layer on top of the Texas notice. Under 42 U.S.C. § 4852d, the seller must disclose any known lead-based paint or lead hazards, hand over any inspection reports they have, and give the buyer the EPA pamphlet “Protect Your Family From Lead in Your Home.”³ The contract must include a Lead Warning Statement, and the buyer gets 10 days to arrange a lead inspection or risk assessment before being bound, unless the parties agree in writing to shorten or waive that window.⁴

“As-Is” Does Not Cancel the Disclosure Duty

Selling a home “as-is” shifts risk to the buyer for conditions neither party knew about. It does not let the seller skip the Seller’s Disclosure Notice, and it does not let the seller lie on it. Known foundation cracks, a leaking roof, prior flooding: all of that still gets disclosed, whatever the listing says. As-is means the buyer accepts the home without demanding repairs. It was never a shield for concealment.

When the Disclosure Notice Isn’t Required

Section 5.008(e) lists eleven exempt transfers.¹ The common ones: foreclosures and sales under a power-of-sale clause or deed in lieu; transfers by a bankruptcy trustee; transfers by a fiduciary handling an estate, guardianship, conservatorship, or trust; transfers between co-owners, between spouses, or to a direct ancestor or descendant; transfers made under a divorce decree or property settlement; transfers to or from a governmental entity; newly built homes that have never been occupied; and properties where the dwelling’s value is 5% or less of the total. Most of these share a logic. Either the person signing the deed never lived in the home and has no firsthand knowledge, or the relationship between the parties makes a standard consumer-style disclosure unnecessary. New construction is exempt because the builder delivers its own warranties instead.

What Happens If a Seller Doesn’t Disclose

The notice must reach the buyer on or before the date the contract binds. If the seller enters into a contract without delivering it, the buyer can terminate for any reason within seven days of finally receiving it.¹ The buyer doesn’t have to point to any specific problem. The late delivery alone is enough.

If closing happens without the notice, or with a notice the seller knew was false, the buyer’s remedies move from contract cancellation to litigation.

DTPA Claims and Treble Damages

The Texas Deceptive Trade Practices–Consumer Protection Act lets a buyer sue for actual damages and recover attorney’s fees when the seller engaged in a false, misleading, or deceptive act in connection with the sale. When the seller acted knowingly, the court can award up to three times the buyer’s economic damages.⁵ A concealed $40,000 foundation problem can turn into $120,000 of exposure plus fees.

Before filing, the buyer must send the seller a written demand letter describing the complaint and the damages claimed. The seller then has 60 days to respond or make a settlement offer before suit can begin.⁶ Skipping the notice step can sink an otherwise strong claim, so buyers should get legal advice before drafting the letter.

Fraud, Breach of Contract, and Rescission

Texas courts recognize both negligent misrepresentation, where the seller failed to use reasonable care in stating facts, and fraudulent misrepresentation, where the seller intended to deceive. Fraud recoveries can include repair costs, diminished value, and in some cases mental anguish. Breach of contract may apply where the purchase agreement itself required accurate disclosures.

Where deception is clear, a buyer can ask a court to cancel the sale rather than just award damages. Rescission puts both parties back where they started: the buyer returns the property, the seller returns the price, and the buyer can also recover transaction expenses like loan fees, inspection charges, and survey costs. Courts can order rescission under common-law fraud or under the DTPA.

Deadline to Sue

DTPA claims must be filed within two years of the date the buyer discovered or should have discovered the deceptive act. That clock runs from discovery, not from closing, which matters because some defects don’t surface for years. Fraud claims follow a similar discovery-based limitations period. Waiting too long after finding a problem can forfeit the right to sue, so documentation and prompt advice matter as soon as something turns up.

Real Estate Agents Are Exposed Too

Agents who help conceal defects have their own problems. Texas Real Estate Commission rules require license holders to exercise integrity, avoid misrepresentation by act or omission, convey accurate information, and keep their principal informed of significant facts about the transaction. TREC can suspend or revoke a license and impose administrative penalties for violations. A buyer who believes an agent was complicit can file a complaint with TREC alongside any civil claim against the seller.⁷

1
State of Texas. Texas Property Code Chapter 5 – Conveyances
2
Texas Legislature Online. 86(R) SB 339 – Enrolled Version
3
Office of the Law Revision Counsel. 42 U.S. Code 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property
4
US EPA. Real Estate Disclosures About Potential Lead Hazards
5
Justia Law. Texas Business and Commerce Code Section 17.50 – Relief for Consumers
6
State of Texas. Texas Business and Commerce Code Chapter 17 – Deceptive Trade Practices
7
Texas Real Estate Commission. TREC Rules