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The agent handles REO assets for the bank. The bank instructs the agent not to review any inspection reports obtained from failed transactions. The bank’s articulated theory is that if the listing agent is not aware of any defects, there is no need for disclosure. Is the listing agent insulated from liability by not reviewing property inspection reports?
No. Pursuant to the Commissioner’s Rules, an agent must disclose all known material facts regarding a property. A.A.C. R4-28-1101. Under a negligent misrepresentation theory, an agent must disclose all material facts about which they should have known under the circumstances. Pursuant to this theory of recovery, an agent cannot simply turn a blind eye to potential sources of adverse information and have no liability, even if the lender tells the agent not to review the inspection report. Therefore, if an inspection report identifies a material defect and the agent does not disclose the defect prior to the close of escrow, the agent will have liability based on this failure to disclose.
A listing agent is asked to list her brother-in-law’s house for sale. Should the agent disclose that the seller is her brother-in-law?
A real estate salesperson or broker shall not act directly or indirectly in a transaction without informing the other parties in the transaction, in writing and before the parties enter any binding agreement, of a present or prospective interest or conflict in the transaction, including that the:
- Purchaser or seller is a member of the salesperson’s, broker’s, or designated broker’s immediate family;
“Immediate family” means persons related to an individual by blood, marriage, or adoption, including spouse, siblings, parents, grandparents, children, and grandchildren. (emphasis added)
Therefore, the agent must disclose that the property is owned by her brother-in-law.
The agent is listing a townhome for a short sale. The owner has moved out of the property and the property is now vacant. While the owner was out of the country, the property flooded. Because the owner did not have homeowner’s insurance on the property, the damage has not been fully remediated. There is now mold growing in the townhome. All parties to the real estate transaction are aware of the flooding and the presence of mold. Does the agent have an obligation to disclose the mold to the neighbors who not involved in the real estate transaction?
By law, the agent must disclose everything she knows about the property to all parties to the transaction. However, the agent does not have a legal obligation to disclose the condition of the property to third parties that are not parties to the sales transaction. Notwithstanding, the agent should advise the homeowners’ association about the mold problem in the townhome so that the association can take any actions it deems necessary for the health and safety of other residents in the community.
The purchase contract has just been signed, and the sale of the home is scheduled to close in thirty days. The listing agent has now learned that the seller has just recovered from swine flu. Does the listing agent have the obligation to disclose to the buyer that the seller had swine flu?
Probably not. A.R.S. §32-2156(A)(2) protects a seller and the real estate licensees from failing to disclose HIV/AIDS or “any other disease that is not known to be transmitted through common occupancy of real estate.” This statute probably applies to the disclosure of swine flu because transmittal of the swine flu virus by the touching of an object, such as a table or doorknob, can only last up to eight hours. After the closing of a sale transaction, very rarely is the buyer in the home within eight hours after the seller has vacated the home. Therefore, swine flu is a disease that probably cannot be “transmitted through common occupancy of real estate.” See Centers for Disease Control and Prevention: http://www.cdc.gov/h1n1flu/.
The buyer’s agent represents an LLC in the contemplated transaction. A member of the LLC is the buyer’s agent’s brother. ISSUE: Must this relationship be disclosed?
Yes. The salesperson must disclose to all parties in writing before the parties enter into a binding agreement if the agent’s immediate family has a financial interest in the transaction. See A.A.C. R4-28-1102(E).
Listing agents 1 and 2 (co-listers) represented a seller in the sale of her property. Listing agent 2 initialed section 3 of the Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards (Sales) Addendum (the “LBP Addendum”) and delivered it to the buyer. ISSUE: Should both listing agents sign and initial the LBP Addendum?
Yes. Section 3 of the LBP Addendum states AGENT’S ACKNOWLEDGEMENT (Any real estate agent who is to receive compensation from the seller or the listing agent with regard to the transaction contemplated in this disclosure must initial below).
Therefore, both co-listers will need to sign and initial where indicated on the LBP Addendum.
Broker A has a listing that was originally built in 1981. Between 2008 and 2012, the house had extensive remodeling done. As a result, the County Assessor’s Office made a “weighted age adjustment” to the property to reflect a new age of 1990. In the MLS, what year should Broker A list the property as, 1981 or 1990?
Broker A may list the year of the property as 1990, based upon the Assessor’s records. However, Broker A should direct the Seller to disclose the two different years in the SPDS, and explain what occurred. The Buyer should be directed to the Assessor’s Office for any questions.