Anatomy of a Real Estate Lawsuit: Disclosure Notice

The seller’s disclosure notice is almost always Exhibit A in lawsuits against sellers and listing brokers.

To understand why, we need to examine the normal factual background and the legal basis for misrepresentation claims.

Factual Background and Cast of Characters 

The buyer and seller close on the sale of the property and, at some point after closing the buyer discovers a problem with the property, and they claim it was not properly disclosed to them.  Some common examples of material defects that lead to lawsuits are water leaks in the roof and/or windows and foundation movement.

You may wonder how a buyer knows whether the seller was aware of the material defect?  Good question.  Buyers frequently talk to their new neighbors and sometimes they are told the defective condition was also a problem for the seller before they sold.  The buyers feel as if they have been deceived, so they retain a lawyer to sue the seller, the listing agent, their own agent and the inspector.

Legal Claims

Buyers can bring many different legal claims including fraud, negligent representation, and violations of the Deceptive Trade Practices Act.  In fact, the Texas Legislature drafted a statute specifically designed to help buyers who find themselves in this position, called the Fraud in a Real Estate Transaction. These claims, while separate, all share a common concept — misrepresentation.  In other words, for the buyer to prevail, they must prove the seller and/or listing broker made a material statement that was false.

Therefore, we know most residential real estate lawsuits stem from a representation regarding a defective property condition that was not true.  The disclosure notice is the document that contains the most, if not all, the seller’s representations about the property’s condition and it’s material defects.  In fact, the disclosure notice contains over 100 representations about the property.  Due to the sheer number of representations on the disclosure notice the fact that some of the questions on the disclosure notice are not exactly clear or easy to understand, sellers frequently make mistakes…which leads to inaccurate disclosure and cause serious issues for both buyers and themselves.

With some commonsense guidance these mistakes can be easily avoided. This is exactly why Sellers Shield™ was founded. Our free interactive seller tools guide home sellers through the disclosure process to help them to avoid making critical mistakes when disclosing the condition of their home.

Share This Post

Subscribe To Our Newsletter

Get the latest updates sent straight to your inbox!

More To Explore

Agent Interview: Ally Osborne

Interview with Ally Osborne Even with accurate disclosure, the buyer may come back and make legal threats against your seller. We recently sat down with Ally Osborne, one of our partner agents in Ohio. Ally explains why she recommends Sellers

Read More »

Lawsuits Continue to Rise, Nationwide

Lawsuits Continue to Rise, Nationwide Buyers were put in challenging positions during the extreme seller’s market of 2021 and 2022. Homes were listed at inflated—sometimes outrageous—prices with contingencies waived. Some home buyers are now experiencing a little “buyer’s remorse”—but on

Read More »

Dangerous Radon Levels in Your Home

Radon Levels in Your Home Many Americans are unaware radon is a health hazard. However, the EPA estimates elevated radon levels affect 1 in 15 U.S. homes. We’ll explore what radon is, its health risks, and how you can identify and

Read More »

A Smarter Way to Disclose

Our online process helps prevent seller mistakes, limits agent liability, and saves a ton of time. Best yet, it’s free to use.
risk before and after the sale

Thank you!

for submitting your email