In Real Estate When in Doubt Disclose!

Non disclosure of water in basementIn Real Estate when in doubt it is always better to disclose, disclose, disclose! There is no point in hiding things in Real Estate as it is very easy to end up in a nasty law suit. Laws vary by state on what needs to be disclosed but as a general rule any material fact that could effect the value of a property should be disclosed to a buyer. Buyers and sellers need to understand it is the Real Estate agents job present everything that they discover about a property.

As an example, if a Realtor happens to see water coming into the basement of a home they are marketing, they sure as heck better be letting any future buyers know about the existence of this problem.

If a Realtor is asked a direct question about a particular property, they must give an accurate and truthful answer to the best of their knowledge. Additionally, a Realtor cannot try to avoid discovering the details of a suspected problem. Avoidance of an issue does not work as an excuse. Years ago when I got into the Real Estate business it used to be “let the buyer beware”. Now it is “let the seller and their Realtor beware”.

My position has always been if you have even the slightest question about whether or not to disclose something to potential buyers, avoid the potential for liability and tell all.

There will always be fine lines on things that need to be disclosed as a recent Massachusetts  lawsuit regarding second hand cigarette smoke suggests. Attorney Rich Vetstein of Framingham Massachusetts does a great job covering this story over at his Real Estate law blog. You can read about it at Lawsuit over second smoke against Realtor raises a stink. Essentially the case is about a women who suffers from asthma claiming that her agent failed to disclose that a heavy smoker lived downstairs. When visiting the unit, before her purchase, she was assured by the Realtor that the cigarette smell would go away once she painted and fixed up the place.

The case boiled down to the agents duty to disclose both defects not only within the property but off-site as well. According to Rich Vetstein, “The Massachusetts Supreme Judicial Court has held that off-site physical conditions may require disclosure if the conditions are unknown and not readily observable by the buyer and if the existence of those conditions is of sufficient materiality to affect the habitability, use, or enjoyment of the property and, therefore, render the property substantially less desirable or valuable to the objectively reasonable buyer.”

Disclosing neighborhood issues

Just reading that statement gives cause for concern. Is it any wonder why their are so many lawsuits in Real Estate? Where do you draw the line when it comes to issues of those living around you? Every persons interpretation of what is considered a nuisance is different.

Fortunately for this Realtor and more than likely for other Realtors in future cases, the jury decided that it was not reasonable for the agent to be responsible for the knowledge of a smoker in another unit.

The take home message here that might be missed, given that the Realtor won the case, is never to make statements for which you are not 100% sure of. Realtors should always be wise about what comes out of their mouth. As someone who has been selling Real Estate in the Metrowest Massachusetts area for the last twenty four years can attest, why make statements you can’t possible know unless you are clairvoyant.

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