I took a listing that is going to be a short sale and will require the lender’s approval. The seller insists that since the lender is a necessary party to any sale that the seller is not obligated to provide a disclosure notice. Is that true?

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  • I took a listing that is going to be a short sale and will require the lender’s approval. The seller insists that since the lender is a necessary party to any sale that the seller is not obligated to provide a disclosure notice. Is that true?

No. Section 5.008 of the Property Code does not grant a seller an exemption to the requirement to provide the seller’s disclosure notice because any sale of the property requires approval by the lender. While the lender’s approval may be necessary for the transaction to be successful, the lender is not a party to the contract. Only the seller is selling the property. Remember that the seller’s disclosure notice is a risk-reduction tool for the benefit of the seller. The seller does not need to add to his financial problems by risking a DTPA suit for nondisclosure of items that could have been provided to a buyer by the careful preparation of the seller’s disclosure notice.

Source: TAR

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