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Consequences of nondisclosure

On Behalf of | May 25, 2023 | Business & Commercial Law

Property owners might feel worried about the disclosure process when they sell their apartment complex. It is understandable because they are concerned about receiving lower offers, privacy issues and additional costs. However, it is important to remember that buyers have the right to know everything about the property they purchase. Failing to fulfill this obligation has both legal and ethical ramifications.

What sellers need to disclose

The purpose of disclosure requirements is to promote transparency and enable informed decision-making. When selling an apartment complex, sellers must provide two types of important information: defects and material facts.

  • Property condition: The age of the building, recent repairs or renovations and any known issues in common areas. These common areas may include parking lots, swimming pools or fitness centers.
  • Homeowners Association (HOA) documents: The HOA bylaws, rules and regulations, financial statements and any ongoing legal disputes or special assessments.
  • Environmental hazards: Any information about flood zones, hazardous materials or any history of contamination in the vicinity.
  • Previous insurance claims: Any claims related to property damage, liability issues or significant events affecting the property’s insurability.
  • Property taxes: The current property tax assessment and inform buyers about recent changes in tax rates or assessments.

It is important to remember that seller disclosure requirements can change over time and vary depending on local laws and regulations. In Texas, seller disclosures are governed by Texas Property Code Section § 5.008.

Legal, ethical and long-term consequences of nondisclosure

If sellers fail to disclose material facts or known defects, they may face potential lawsuits, the nullification of contracts or financial liabilities. Intentionally withholding crucial information can be seen as deceitful or fraudulent. From an ethical standpoint, this damages the trust between buyers and sellers, which can lead to disputes and harm reputations.

Moreover, noncompliance with disclosure requirements can have long-term consequences, such as negative word-of-mouth. This may lead to diminished credibility in the real estate market or difficulties in future transactions. Establishing a reputation as a seller who operates with integrity and transparency is vital for long-term success and maintaining positive relationships within the industry.

Can attorneys help?

Engaging the services of a real estate attorney may be able to provide property owners with the necessary knowledge and peace of mind during the property disclosure process. Property owners can ensure a smoother and more compliant transaction by working with these professionals.

By adhering to disclosure requirements, sellers build trust, reduce risks and contribute to a transparent and successful transaction.