Working With a Realtor – What are their Legal Responsibilities?
Choosing an honest and skilled Realtor is important. Purchases of real estate are the largest purchases that most of us will make in our lives. Repairs to defects on property are normally expensive, making some sellers reluctant to disclose the true nature of certain aspects of the property. When either or both parties hire a Realtor, the Realtor has an obligation to fulfill certain duties and make certain disclosures.
General Legal Duties of a Realtor
The exact legal duties of a Realtor in any particular area vary at the state level. Generally, real estate agents are bound by statutory and ethical obligations to their clients. Realtors have a fiduciary duty to their clients to act honestly and with integrity. They also have a duty to exercise good faith and fair dealing and perform their duties with reasonable skill and care.
Specific Disclosure Duties
Among these duties is the duty to openly disclose a large quantity of information. As espoused by Avenue Realty, LLC in Charlottesville, licensed Realtors “believe that a client’s trust is necessary and earned through honest work and transparent processes.” States use different forms to disclose defects in the property. While states differ in the exact nature of the required disclosures, the disclosures generally pertain to current defects in the property. These defects usually include structural damage, environmental contamination, soil problems, non-permitted additions to the property, zoning violations, deed restrictions, areas of the property owned jointly with another party, and other concerns.
Some states have limited disclosure requirements that pertain to past events on the property. Many states require the buyer to report certain deaths on the property. States differ on the reporting requirements as the nature of the death changes or the times change; if the death occurred more than a certain time ago or if the death was non-violent in nature, reporting may not be necessary.
Conflicting Interest Disclosure
The National Association of Realtors also requires its members to disclose any potential conflicts of interest. Realtors may represent both the buyer and the seller in the same transaction, but the National Association of Realtors advises disclosing this fact to both parties. Realtors must also disclose the fact that they are acquiring property for themselves, family members, or corporations in which they have an interest if that is what they are doing.
Realtors also have a duty to avoid disclosing certain information. Realtors who represent both the buyer and seller will discover each party’s comfort zone with respect to the selling price. The parties may also confide their willingness to concede certain amenities such as furnishings or upgrades as a condition of purchasing or selling the property. An unethical agent can quickly structure the deal so that one party is successful in taking advantage of the other’s weaknesses. Realtors must remain impartial and as always, act in good faith.
Sanctions for Violating Disclosure Laws
In most states, agents who violate their duties face civil lawsuits as well as a loss of their real estate licenses. Criminal charges may also be possible. If a material disclosure was omitted and if the Realtor knowingly misrepresented the condition of the property in order to effect a sale, some prosecutors will charge the realtor with fraud. Depending upon the nature of the communication, there may be a host of possible charges pertaining to the fraudulent act.
Each state has different requirements as to what the Realtor must disclose. For example, in California, the listing agent must conduct his or her own reasonably thorough inspection of the property and disclose any facts material to the desirability, use, and value of the property in addition to providing the existing seller’s disclosure forms. The specific disclosures are numerous and varied between the states. A straightforward and honest realty agent will disclose any material problems without statutory compulsion, thus preventing both parties from litigating problems at a future date. When buying a home, a skilled agent can help prevent problems down the road and spot issues before they occur.
A former news writer, Ann Bailey provides these reviews of real estate agents’ responsibilities of disclosures to both buyers and sellers in property transactions. As advised by Avenue Realty, LLC in Charlottesville, the ethical behavior of the Realtor toward the other parties should encompass making a property purchase an enjoyable process as well as a headache free legal event.
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