Paperwork Needed to Sell a House By Owner in Texas

GET A CASH OFFER NOW

From an A+ BBB rated business.

GET A CASH OFFER NOW

From an A+ BBB rated business.

When selling your home, it’s only natural to want to make as much profit as possible. Using a real estate agent makes the sale process run more smoothly, but it also takes away from the money you’ll earn from the sale. That’s why some people choose to list their home as “for sale by owner,” also known as FSBO.

However, be aware that selling a home independently isn’t a task that can be taken lightly. It requires a ton of time, effort, and, most importantly, legal savvy. If you’re considering selling your house by owner, it’s critical to have a thorough understanding of the following documents you’ll need as you navigate through the FSBO process.

Disclaimer – The information in this post is intended for general informational purposes only and not to provide legal advice.

How Does FSBO in Texas Differ from Most Other States?

Selling a home by owner in Texas is easier than in many other states because access to the necessary materials is not restricted to licensed professionals. The Texas Real Estate Commission (TREC) has made various documents written by lawyers and used by realtors available to the general public on their website.

Of course, just because these documents are easy to find doesn’t necessarily mean they are easy to understand or utilize. It’s essential to have a firm grasp on which forms you’ll need and what purpose each of them serves. Continue reading for a brief overview of the most commonly used forms.

Basic Forms You Will (or May) Need

While different home sales may require various documents, some forms are common or mandatory across the board. Below are the primary forms you’ll most likely need.

  1. Residential Purchase Agreement

    The most important document for selling a property is the purchase agreement. This form lists all the terms and conditions of the sale and describes the property’s features.

    For most home sales, the One to Four Family Residential Contract (Resale) (Form ID: 20-16), also known as the TREC 1-4, should be used, but different property types require different purchase agreement forms:

  1. Seller’s Disclosure Notice

    In Texas, any party selling a single-family home is required to provide a seller’s disclosure notice. This document details any problems or complications with a house that could impact a buyer’s decision or decrease the home’s value.

    The specific information that must be included in a seller’s disclosure notice may vary depending on state or local laws. Texas, for example, requires that a seller disclose detailed information on their property’s flood history. Be sure to do plenty of research on what to include in your disclosure notice. If you fail to complete this form accurately to the best of your knowledge, a buyer can file a lawsuit against you.

    There are two types of seller’s disclosure notices in Texas: one provided by the Texas Real Estate Commission (TREC) and one provided by the Texas Association of Realtors (TAR). The TREC’s Seller’s Disclosure Notice (Form ID: OP-H) is available to the general public and covers the basic information that needs to be disclosed according to state law. The Texas Realtors Seller’s Disclosure Notice (Form ID: TAR-1406) is more detailed than the TREC document, but it is only available to licensed realtors.

  2. HOA Addendum

    In some cases, owning a home requires a homeowners association (HOA) membership. If your house is part of a mandatory HOA, you must inform the buyer of its details with the TREC’s Addendum for Property Subject to Mandatory Membership in a Property Owners Association (Form ID: 36-9).

    This form informs a buyer that a home is in a mandatory HOA and clarifies the following points of interest:

      • In some cases, the buyer or seller will need to obtain subdivision information detailing HOA rules. The HOA addendum states that the buyer has the right to back out of the sale if they do not receive this information in time.
      • HOAs require that a small fee, known as a transfer fee, be paid any time a home transfers ownership. While the seller traditionally pays for the transfer fee, this is not a concrete rule. The HOA addendum specifies whose responsibility it is to cover this fee.
      • A home for sale in an HOA must come with a resale certificate detailing the property’s current status, including any rule violations or past-due payments. The seller typically pays this, but the HOA addendum specifies if the buyer needs to pay.
  1. Lead-based Paint Addendum

    Lead-based paint is a highly toxic substance that can cause severe health problems when its dust is released into the air. While this type of paint was banned for residential use in 1978, houses built before this ban may still contain it. For this reason, federal law requires that sellers fill out a lead-based paint addendum when selling a home built before 1978.

    Sellers of homes built before the lead-based paint ban must complete the TREC’s Addendum for Seller’s Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law (Form ID: OP-L).

  2. MUD Notice

    A Municipal Utility District (MUD) is a subdivision that provides services including water, sewage, drainage, and other utilities. If you sell a home in a MUD, you must give the buyer a MUD notice. This document lists any additional taxes or fees the homeowner must pay to live in the MUD.

    There are three different MUD notices included in Texas Water Code Section 49.452:

      1. Use the notice in 49.452(c) for a MUD located within city limits.
      2. Use the notice in 49.452(b) for a MUD that is located outside of city limits, but within the city’s jurisdiction.
      3. Use the notice in 49.452(d) for a MUD that does not meet the above criteria.

Common Contingency-Related Forms

A contingency is a clause in a real estate contract outlining specific conditions that need to be met. If these conditions are not met, the contract is not binding, and the buyer has the right to terminate the sale without repercussions.

Contingencies are needed to protect buyers’ rights, and most buyers will only enter into a contract that contains one or more contingencies. Here are the documents you’ll need for some of the most common contingencies:

  1. Third-Party Financing Addendum

    Most buyers need a mortgage to purchase a home. If their mortgage lender doesn’t approve their loan, they will have no way to finance the purchase. This is why the third-party financing addendum is included in many sales contracts.

    The TREC’s Third Party Financing Addendum (Form ID: 40-9) specifies the type of loan(s) the buyer is applying for and highlights their responsibility to do everything in their power to obtain funding. It also goes into further detail on requirements for FHA and VA loans and clarifies that the contract is contingent on the lender approving both the buyer and the property.

  2. Right to Terminate Due to Appraisal

    If an appraisal reveals that a home is worth less than what the seller is charging, it can cause the buyer to lose interest, and the mortgage lender could deny the buyer’s financing. The TREC’s Addendum Concerning Right to Terminate Due to Lender’s Appraisal (Form ID: 49-1) protects the buyer from overpaying in this event.

    The document states that if a home is appraised to be worth less than its sale price and the seller refuses to lower the price accordingly, the buyer has the right to terminate the contract.

  3. Amendment to Contract Addendum

    Sometimes a buyer and seller will agree to make changes to their initial purchase contract after it has been executed. Such amendments may include:

        • Changing the selling price after an inspection brings new issues to light
        • Changing a deadline, like the closing date
        • Requiring that the seller make repairs before the sale
        • Updating the contract to reflect that the buyer has paid the seller an option fee
        • Correcting a misspelled name in the original contract

    These changes and any others need to be addressed in the TREC’s Amendment to Contract (Form ID: 39-8).

  1. Other Contingency Forms

    While the forms listed above are the most commonly used, they are far from the only documents available for contingencies. Many other situations may require additional paperwork, such as a purchase contingent on the sale of another home, a seller leaseback, or a short sale.

    Be sure to check the TREC’s full list of Contract Addenda for any forms that may apply to your specific situation.

Get a Legal Review

The documents linked above were created by lawyers, and the language used in them may be difficult for the average person to comprehend. Even if you think you understand everything, there’s the possibility that you’ve misinterpreted something important that could lead to legal trouble later on.

It’s always wise to have a lawyer review any contracts before you sign them to ensure there are no misunderstandings—especially if you’re not working with a realtor who has experience with these legal documents.

Want to Skip the Paperwork?

Dealing with all the documents when selling a house can be difficult for a homeowner to handle on their own. You can always save yourself from this hassle and sell to a cash buyer, like AMI. Get in touch with us today for a no-obligation cash offer. We’ll take care of all the necessary paperwork for you, making your home sale go quickly and smoothly.

GET A CASH OFFER NOW

We are cash home buyers & an A+ BBB rated business.