Marcus and Jennifer Chen had done everything right. They hired an inspector. They reviewed every page of the seller's disclosure form. They asked their real estate agent about the neighborhood's foundation history. When the McKinney listing described the home as being sold "as is," their agent explained what he understood it to mean: no repairs, no credits, take it or leave it. They offered $487,000. The sellers accepted. Thirty-one days later, the Chens had keys to their new home.
Three months after moving in, Jennifer noticed the guest bedroom door would no longer latch. Then a crack appeared along the crown molding in the living room. Then another, branching across the kitchen wall like a fault line. A foundation engineer arrived in February. His diagnosis: significant differential movement — one corner of the slab had dropped more than two inches, likely over several years of soil shift. Repair estimate: $43,000 to $57,000, depending on how deep the problem ran.
What the Chens discovered next was worse. While cleaning out a shelf in the garage left behind by the previous owners, they found a manila folder. Inside: two foundation repair estimates, dated fourteen months before the home was listed. The sellers had known. They had simply checked "No" next to "Are you aware of any structural or foundation issues with the property?" on the TREC Seller's Disclosure Notice — and listed the home as "as is."
Their agent's first reaction: "You signed 'as is.' I'm not sure there's much you can do." He was wrong.
The Most Misunderstood Clause in Texas Real Estate
The "as is" clause is one of the most powerful — and most misunderstood — provisions in Texas real estate transactions. Sellers reach for it like a shield, believing it insulates them from any liability once the sale closes. Buyers hear it and assume they have surrendered their right to complain. Both beliefs are wrong, or more precisely, both beliefs are only sometimes right.
The Texas Supreme Court drew the line clearly in Prudential Insurance Co. of America v. Jefferson Associates, Ltd., 896 S.W.2d 156 (Tex. 1995). The case involved a commercial building in Austin sold by Prudential to a buyer named Goldman. Years after the sale, Goldman discovered the building contained asbestos fireproofing. He sued, arguing Prudential had failed to disclose it.
The Texas Supreme Court ruled in Prudential's favor — but only because there was no evidence of fraudulent concealment. The Court explained the underlying logic of the "as is" doctrine: when a buyer agrees to purchase something in its present condition, without warranty, that buyer accepts the risk that the condition may be worse than it appears. The seller gives no assurances. The buyer makes their own investigation and their own judgment. That is a legitimate bargain.
But the Court added a sentence that sellers too often ignore: "A buyer is not bound by an agreement to purchase something 'as is' that he is induced to make because of a fraudulent representation or concealment of information by the seller." The "as is" clause does not immunize fraud. It never did.
What Texas Law Actually Requires Sellers to Disclose
Texas Property Code § 5.008 creates a mandatory seller disclosure obligation for residential properties of one to four dwelling units. Sellers must deliver a written Seller's Disclosure Notice to the buyer on or before the effective date of the contract. The form — issued by the Texas Real Estate Commission (TREC) — asks sellers to disclose their knowledge of dozens of specific conditions, including:
- Structural or foundation defects, including previous repairs
- Roof condition, previous leaks, or insurance claims
- Plumbing and electrical system issues
- HVAC system condition and history
- Past pest infestations and treatment history
- Presence of hazardous materials (asbestos, lead paint, radon)
- Unpermitted additions or modifications
- Flooding history — whether the property lies in a floodplain, whether it has flooded, and whether any insurance claims have been filed for water damage
That last category — flooding — was dramatically expanded in 2019 after Hurricane Harvey exposed how many Texas sellers had remained silent about repeated flood events. The 86th Legislature amended the disclosure form to require sellers to answer specifically whether the property had ever flooded, whether it had ever received FEMA assistance for flood damage, and whether it was located wholly or partly within a 500-year floodplain. For buyers in the Dallas-Fort Worth Metroplex, where flash flooding events have increased in frequency and insurance costs have followed, these disclosures matter enormously.
The critical phrase in every disclosure question is "to the best of seller's knowledge." Sellers are not required to be omniscient. They are required to be honest about what they know. Marking "Unknown" when you genuinely don't know is legally appropriate. Marking "No" when you know the answer is "Yes" is fraud.
When "As Is" Collapses: The DTPA and Treble Damages
When a seller lies on a disclosure form — or omits facts they are legally obligated to share — the buyer's remedies in Texas are substantial. The Texas Deceptive Trade Practices Act treats intentional misrepresentations in a residential real estate sale as a consumer protection violation. Under the DTPA, a buyer who proves knowing concealment of a material defect can recover not only their actual damages, but treble damages — three times the value of the loss — plus attorney's fees and court costs.
This is not a theoretical remedy. In Travis County alone, real estate disclosure disputes represented roughly 12 percent of all residential litigation filed in 2025, according to district court records. Foundation defects are among the most common triggers, particularly in North Texas, where approximately 80 percent of residential construction uses shallow slab-on-grade foundations. These foundations are acutely vulnerable to the expansive clay soils of the DFW Metroplex, which swell and contract with the seasons, generating movement that can crack slabs, distort frames, and render doors inoperable — exactly the symptoms the Chens encountered.
The legal standard for voiding the "as is" clause is not high. A buyer does not need to prove the seller hatched a deliberate scheme. They need to establish three things: (1) the seller knew about the condition, (2) the seller failed to disclose it, and (3) the failure was material — meaning it would likely have affected the buyer's decision. Foundation issues worth $43,000 are material. Roof damage requiring a $28,000 replacement is material. A flooding history that will affect insurance premiums for the life of ownership is material.
The Closing Documents Trap
There is a legal wrinkle that Texas home buyers rarely anticipate. Some closing documents — particularly documents that sellers' attorneys have inserted in recent years — include language that expressly waives any claims related to the property's condition, including fraud claims. The Texas Supreme Court, in a line of cases following Prudential, has upheld such waivers when they are specific, conspicuous, and freely negotiated.
This means the seller's disclosure form and the closing documents can work against each other. A buyer who receives a disclosure form with false answers — and then signs a closing document with a sweeping fraud waiver — may find in some courts that the waiver negates the DTPA claim. The lesson is not that buyers should refuse to close, but that buyers should read every line of every closing document and understand what rights they are signing away. If such a waiver appears, have an attorney review it before the transaction closes.
What the 2026 TREC Proposals Mean for Buyers and Sellers
On February 9, 2026, the Texas Real Estate Commission proposed expanding the Seller's Disclosure Notice for the first time since the 2019 flood amendments. The proposed additions target gaps regulators identified in areas including insurance history, water rights, and environmental conditions. While the final form had not yet been formally adopted as of this writing, the direction is clear: Texas's view of what sellers must share is expanding, not contracting.
For sellers, this is a reminder that disclosure obligations in Texas are a moving target. What you were not asked to disclose five years ago, you may be legally required to disclose today. The safest approach is also the simplest: disclose everything you know. If you are uncertain whether something rises to the level of a material defect, disclose it anyway. The cost of including an extra line on a disclosure form is zero. The cost of not disclosing it — if it later surfaces — can be hundreds of thousands of dollars in treble damages, plus the other side's attorney's fees.
Practical Steps: Before You Buy or Sell in Texas
If you are buying:
- Read the Seller's Disclosure Notice line by line — do not rely on your agent's summary
- Ask the seller directly, in writing, about any conditions that concern you
- Hire a licensed structural engineer (separate from a general inspector) for any home with visible cracks, sticking doors, or uneven floors
- Check the property's flood map designation independently at FEMA's Flood Map Service Center
- Review all closing documents before signing — if anything appears to waive defect or fraud claims, have an attorney review it first
If you are selling:
- Complete the Seller's Disclosure Notice honestly — the "as is" designation in your contract does not substitute for it or override it
- If you have received repair estimates, had pest treatments, filed insurance claims, or experienced flooding, disclose those events
- Consult an attorney before marking "Unknown" on any condition you actually have reason to believe exists
- Understand that a buyer who later proves you knew about a concealed defect will have access to DTPA treble damages — a $30,000 repair can become a $90,000 judgment before attorney's fees are added
Back to the Chens
Marcus and Jennifer Chen retained a real estate attorney and filed a DTPA claim against their sellers. Their evidence — two repair estimates predating the listing, the fraudulent "No" answer on the disclosure form, and the sellers' inability to explain how they were unaware of a foundation condition that had generated written estimates fourteen months earlier — proved sufficient for the court to submit the fraud question to a jury. The case settled before trial for an amount that covered the full cost of the foundation repair and the Chens' attorney's fees.
The "as is" clause did not protect the sellers. It never does when the seller lies.
The sellers in that case likely believed, as so many do, that checking a box and writing "as is" in the contract was a simple way to transfer risk and close the door on liability. But Texas law has always understood something more nuanced: the "as is" doctrine assumes the buyer has a fair opportunity to discover defects. When a seller removes that opportunity by concealing what they know, the doctrine collapses. The law does not reward fraud by calling it a contract term.
If you are navigating a real estate transaction in McKinney, Frisco, Plano, Allen, Southlake, or anywhere in the greater DFW Metroplex — whether as a buyer who has discovered undisclosed defects or as a seller seeking to understand your disclosure obligations — the attorneys at WG Law can help. Our real estate team has handled real estate disputes and title matters in Texas for decades, including Stephan D. Hwang, who has been litigating real estate cases in North Texas since 2007. Contact us for a consultation.
This article is for general informational purposes only and does not constitute legal advice. Real estate law is fact-specific, and the information here may not apply to your situation. Consult a qualified Texas real estate attorney before making decisions about buying, selling, or pursuing claims related to real property.