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Forms changes
A summary of what's different in the Seller's Disclosure Notice and other forms.
by Ron Walker A Texas Association of REALTORS® task force recently revised the TAR Seller’s Disclosure Notice (TAR 1406), adopted a new notice related to the affordability and availability of property insurance, and revised a few other forms.
Seller’s Disclosure Notice (TAR 1406)
Most obviously, the format of the form changed. The font size was increased to 11-point type and the checkboxes were replaced with tables to make the form easier to read. Highlights of other changes in the form include the following:
In section 1
After the question on page 1 that asks the seller how long since he has occupied the property if it is unoccupied, a checkbox was added for convenience that states that the seller never occupied the property.
The note advising that the notice does not establish which items will be conveyed was moved to a more prominent position (previously located at the bottom of the first page).
The following fields were added: Carbon Monoxide Detectors, Cooktop, Stove (after range), Roof/Attic Vents, and Other Heat.
All of the cooling and heating items were grouped together and placed in the larger table on page 1. This change also permitted space for the seller to indicate the number of units after wall/window AC units and after Evaporative Coolers.
Under Fireplace and Chimney, the checkbox for a Direct Vent Fireplace was deleted and replaced with a blank entitled other.
Under Garage Door Openers, the item that read number of controls was changed to number of remotes.
Under Water Heater, the checkbox for solar was deleted and replaced with a checkbox asking for the number of units.
Under Septic/On-Site Sewer Facility, the checkbox and blank line concerning attachments was deleted. The form instructs the seller to attach TAR form 1407 if a septic or other on-site sewer facility is present.
After the question asking if the property was built before 1978, a parenthetical was added that instructs the seller to complete and attach TAR form 1906 (the disclosure related to lead-based paint). This change was made to encourage that TAR 1906 be attached to the seller’s disclosure notice and delivered to the buyer before the buyer prepares a written offer. This change is the direct result of reports to the association about the results of many EPA audits related to lead-based paint disclosure compliance.
In section 3
The following fields were added: Encroachments onto the Property and Improvements encroaching onto others’ property.
Previous Flooding into the Improvements was changed to Previous Flooding into the Structures.
In section 5
Under the question related to homeowners associations, a blank was added for the name of the association and an instruction was added to include additional information if the property is located in more than one association.
Under the question concerning lawsuits or other legal proceedings, the lines specifically referencing condemnation proceedings and pending or threatened changes in zoning or deed restrictions were deleted.
Under the question concerning prior remediation of environmental hazards, an instruction to the seller was added to attach any certificates or other documentation identifying the extent of the remediation.
The question under section 6 is new and asks the seller if a survey is available and whether it is or is not attached to the notice.
The question under section 9 concerning the receipt of proceeds received for claims for damage to the property was expanded to include not only insurance proceeds but any settlement or award in a legal proceeding.
Immediately above the seller’s signatures,
a statement was added under which the seller acknowledges that the seller completed the notice truthfully and that no one has instructed or influenced the seller to provide inaccurate information or to omit any material information.
Under the signatures, blanks for the printed names of the seller and the buyer were added.
A new notice was added under Notices to Buyer that advises the buyer to verify any square footage, measurements, or boundaries if the buyer is basing an offer on any such items.
Information About Property Insurance For A Buyer Or Seller (TAR 2508)
The task force adopted a new form (TAR 2508) that discusses the affordability and availability of property insurance. The form may be given as information to either a buyer or seller. The form incorporates parts of several articles related to property insurance that were published in Texas REALTOR® magazine over the last few years. As in those articles, the form discusses items such as the CLUE report, underwriting criteria that insurance companies may use, and varying rates. The form also gives information about how to obtain a CLUE report and correct any mistakes in it. Most importantly, the form suggests that the buyer undertake certain steps and verifications before the expiration of any option period under a contract in order to avoid any delays.
The task force received comments related to the seller’s disclosure notice that suggested adding a question about whether the seller had filed any prior insurance claims. After studying the issue, the task force determined that knowing whether the seller had or had not filed a prior claim would not indicate whether property insurance is or is not available, at what rate, or at what coverage level. Only after a review of the criteria that a particular insurance company uses can one determine what type of coverage is available and at what rate. Additionally, the task force learned that what the insurance industry considers to be a claim for the purpose of the CLUE report is not necessarily what the typical consumer understands a claim to be. The task force was concerned that a response from the seller about the claims history might vary significantly from what is contained in the CLUE report. Based on the foregoing, the task force determined that the fair and prudent practice is to provide the buyer with information, such as the information contained in TAR 2508, and encourage the buyer to follow the suggestions outlined in the form.
Notices Regarding Contingency Under Addendum For Sale Of Other Property By Buyer (TAR 1912)
TAR 1912 is not a new form but was significantly revised. The purpose of the form was limited only to the contingency under the Addendum for Sale of Other Property by Buyer. It is now divided into two parts. The first part is a notice from the seller to the buyer advising the buyer that the seller has accepted a backup offer from another buyer and that the buyer either waives the contingency or the contract will terminate. The second part of the notice is the buyer’s response.
Seller’s Notice To Buyer Of Removal Of Contingency Under Addendum For Back-Up Contract (TAR 1913)
TAR 1913 is not a new form, but was revised so that its purpose is limited only to the seller notifying the backup buyer that the first contract has terminated and that the backup contract is now the first contract. It also contains a statement under which the seller affirms the date of the amended effective date (the date the buyer receives notice that the first contract terminated).
Buyer’s Walk-Through And Acceptance Form
(TAR 1925)
The revisions to TAR 1925 were primarily grammatical. The main substantive change was the elimination of the blank lines for the buyer to describe any outstanding repairs that have not been completed. The buyer should not execute the form until such time as the buyer accepts the property and acknowledges that any repairs have been completed.
Ron Walker is director of legal affairs for the Texas Association of REALTORS®.
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