Agents completing Seller’s Disclosure Forms
Unless the agent is the seller or a formal party to the transaction, it is not legal for him or her to complete the seller’s disclosure form. Agents who complete these forms risk a lawsuit. If your seller is not capable of completing the form on his or her own (E.g., perhaps he or she is disabled, elderly, or does not speak English), you are advised to seek the council of your broker or a real estate attorney before proceeding.
And in those instances when a seller asks someone else to complete the form (E.g., a relative or friend), it’s a good idea to ask for written authorization from the seller indicating that the individual ( the person the seller selected) has been given authority to interpret, read, or help to complete this document and have it signed by the seller, or if there is a POA, Power of Attorney, on behalf of the seller.
Agent’s/Broker’s Duty to Disclose
So given the information covered so far, ask yourself the following questions to test your knowledge of agent disclosure in the transaction process:
- What problems does the seller have to inform the buyer on?
- If you are the seller’s agent, what do you need to disclose?
- And what if you’re the buyer’s agent; what do you need to disclose then?
As you contemplate the answers to these questions, consider the following case:
In Pagano v. Krohn, 97 Daily Journal D.A.R. 15195, November 17, 1997, the Pagans had purchased a condo from Ms. Krohn, and shortly after moving inexperienced water intrusion. Given the extent of their property damage, they sought action for rescission, and for damages for fraud, breach of fiduciary duty, and negligence which implicated the seller, the seller’s agent, and the buyer’s agent.
Despite the (Buyers) Pagano’s’ arguments, however, the court ruled in favor of the seller, her real estate agent and the Pagans’ agent because they had sufficiently disclosed all that they should have during the transaction process.
In forming its conclusion, the court cited the following significant events:
Preceding the sale of the condo from Ms. Krohn to the Pagans, Ms. Krohn indicated that a lawsuit existed between the neighborhood homeowners’ association and the property developer regarding construction deficiencies.
The seller did not have any problems with water intrusion before selling her unit. An inspector, contracted by the Pagans, was unable to find any sign of water damage during a four-hour inspection of the property, and he did recommend that gutters and downspouts be installed to facilitate proper drainage on the site.
The seller’s real estate agent told the buyers that the lawsuit pending between the homeowners association and the developer involved water intrusion problems. Additionally, after her buyer’s comment on the seller’s disclosure form which indicated that the property did not have any damage resulting from water intrusion, she wrote” I know nothing to contradict the owner’s statements above. This development is on leased land. Some units have experienced moisture intrusion but not this unit according to the owner.”
The buyer’s agent gave the Pagano’s a letter from the Board of Director’s explaining that the lawsuit had been filed against the Developer that explained how the association was hoping to work out a settlement regarding downspouts and gutters. He also wrote the following statement on the seller’s disclosure form, “This home seems to be in good shape. I recommend that [the Paganos] have the property inspected prior to the close of escrow.”
Given these facts, the court concluded that the buyer had enough information to make an informed decision regarding the purchase of the property preceding the transaction. Also, it’s important to understand that as a residential agent/broker, after you have disclosed a material fact or circumstance about the property to a buyer, the burden shifts to the buyer to elicit additional details or information concerning the fact or circumstance. It is not the duty of an agent/broker under common law principles to specify or legitimize significant, legal effect, or practical impact of a fact which is known to the buyer, or within the buyer’s diligent attention.