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Legal IssuesTo disclose or not to disclose?
While representing a seller, the listing agent learned about a material defect in the property. The seller refused to reveal the defect, and when the agent insisted that either the seller had to disclose the defect or the agent would, the seller fired the agent.
Sometime later, the listing agent (now a buyer’s agent) showed that property to an interested buyer. The agent smartly reviewed the seller’s disclosure statement with the buyer and noticed that the defect was not disclosed. Can the agent disclose the known defect?
What an interesting quandary. The seller disclosure law requires agents to disclose material defects of which they have actual knowledge. But the immediate reaction of the seller, and perhaps the agent, is that there is an on-going duty to clients (and former clients). While there is an ongoing duty, it is not without its limits. In this instance, there is a law that specifically requires the agent to disclose what he knows, regardless of who may be affected.
So what should this agent do? Certainly, his obligation to his current client – and more importantly, under the law – is to disclose the defect. However, we might suggest that the agent let the seller know, before disclosing this defect, what he is going to do and why. (Of course, if the seller has a new listing agent, all communications should be with the new agent.) Does the agent have to tell the seller? Maybe yes, maybe no; but it certainly is the better practice.
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About Brett: Brett Woodburn, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. |
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