SELLER’s DISCLOSURE OF PROPERTY CONDITION NOT REQUIRED FOR VACANT LAND

Posted on by Trey Wilson -- San Antonio Real Estate Attorney
                        
                            Trey Wilson san antonio                         
                    

GENERAL REQUIREMENT FOR WRITTEN NOTICE OF PROPERTY CONDITION

Section 5.008(a) of the Texas Property Code provides

A seller of residential real property comprising not more than one dwelling unit in this state shall give to the purchaser of the property a written notice as prescribed by this section or a written notice substantially similar to the notice prescribed by this section which contains, at a minimum, all of the items in the notice prescribed by this section.

Section 5.008(b) provides a prescribed form for the disclosure required by subsection (a). See id. § 5.008(b) (identifying minimum disclosures that must be made and requiring that written notice be in form “substantially similar” to that provided in statute).

INAPPLICABILITY OF DISCLOSURE REQUIREMENT TO CERTAIN TYPES OF TRANSFERS

The statute expressly provides that it does not apply to eleven different types of transfers, including a transfer “of real property where the value of any dwelling does not exceed five percent of the property value.” Id. § 5.008(e)(11).

It has been argued that section 5.008(e)(11) is intended to exempt from the statute transfers of real property on which there is a “dilapidated” structure that does not exceed five percent of the property value but not to exempt transfers of real property that have no structures on them.  Under this interpretation where there is no structure on the property, the transfer does not fall within the 5.008(e)(11) exemption to the disclosure requirement, and the Sellers are required by law to provide a disclosure substantially similar to the form of notice set forth in subsection 5.008(b).  Under the light of examination of  the entirety of the text of the whole statute (as opposed to isolated provisions), this argument fails.

THE DISCLOSURE REQUIREMENT DOES NOT APPLY TO VACANT LAND

Section 5.008, by its terms, applies to sales of “residential real property comprising not more than one dwelling unit” and does not apply to the transfer of real property on which the “value of any dwelling does not exceed five percent of the value of the property.” Tex. Prop. Code § 5.008(a). Thus, the statute plainly applies to sales of real property on which is located only one dwelling unit, the value of which represents more than five percent of the value of the property transferred.

Where a Property does not have any dwelling unit on it, the transfer of the Property does not fall within the scope of section 5.008, which applies only to a sale of “residential” real property.

That the Legislature intended that section 5.008 apply to transfers of land that have a dwelling unit of more than de minimis value, and not to transfers of unimproved real property, is apparent from the type of information the seller is required to disclose, including:

  • what appliances are present and their condition;
  • the nature of any heating and cooling systems;
  • the presence of decking, spas, hot tubs, fireplaces, and garages; and
  • the roof type. See id. § 5.008(b).

The statute also requires that the notice include disclosures regarding:

  • the presence of termites,
  • previous termite damage,
  • water penetration,
  • lead based paint,
  • aluminum wiring,
  • whether the seller is occupying the property and, if not, how long it has been since he did. Id.

Thus, as applied to vacant land with no dwelling unit, the contents of the disclosure would provide little to no information of value to a purchaser and would serve essentially no purpose. See City of Dallas v. TCI West End, Inc., 463 S.W.3d 53, 55 (Tex. 2015) (courts must avoid adopting interpretation that renders any part of statute meaningless).

The statute’s reference to “residential real property,” as well as the nature of the information required to be disclosed, indicate the Legislature’s intent that section 5.008 apply to transfers of real property on which there is a dwelling unit whose value represents more than five percent of the property’s value, and not to the sale of vacant land such as the Property at issue in this case. See id. at 55 (“We consider the statute as a whole, rather than viewing individual provisions in isolation, and presume the Legislature selected the statute’s language with care, choosing each word for a purpose and purposefully omitting words not chosen.”).