July 19, 2019
When selling a property, real estate professionals are required to disclose problems that could, in turn, affect the property’s overall value or desirability on the market. In most states, concealing any issues from potential buyers or investors could land you a major fine and hit to your reputation.
Investopedia points out a number of areas where a homeowner or a real estate professional selling a property has to disclose, including water damage, hazards, and even deaths in the home. In most states, sellers are required to take a proactive role by making written disclosures about the overall condition of the property.
Here’s some more information on when a real estate agent is required to disclose certain issues with a property:
What Must Be Disclosed
In general, real estate professionals are responsible for disclosing only information within their personal knowledge. However, most states in the country require more due diligence when representing a property. There are laws in place that identify certain problems that end up being the responsibility of the real estate agent or broker, whether they see signs of issues or not.
In these instances, or where you decided not to take action regarding a certain defect, you could ultimately end up in a major court battle, and end up compensating the buyer for the costs of failing to point out the issues.
Whether or not something is truly your fault when it comes to responsibility for defects in a property, having real estate insurance clearly outlined for agents and brokers can limit exposure and minimize financial hardship in a court case. Companies like ALIA Riverton can help to provide personalized insurance packages for real estate professionals looking to be financially and reputationally protected in the event of a claim.
While these aren’t usually required, calling for a full-scale inspection of a property is a good rule of thumb. Some sellers hire property inspectors to give a house a complete once-over before it is put on the market. The results that come from these inspections will help determine what items or house features need repairs or replacements, and will also help with preparing any disclosures that need to be made known. This move shows responsibility, transparency, and due diligence, which all go a long way with potential buyers.
When In Doubt, Disclose
Full disclosure of any property issues will help increase the overall confidence a buyer has in you as a representative of that house. If you have an inkling of an idea that something needs to be inspected and pursued, err on the side of disclosure. This will help protect you from legal issues and keep your performance record safe. Plus, you’ll have the confidence of the buyer to pass along your name and company as a trusted source.
However, if you are not positive about what you are disclosing, do not disclose it. Making an inaccurate assertion about a property is a surefire way to end up with an errors & omissions claim. If a potential buyer asks you and you don’t know the answer? Respond, “Let’s ask the owner”.
Requirements Per Your Location
Check in with your local state department of real estate when it comes to understanding what needs to be disclosed. Also, keep in mind that you can reach out to your city planning department for information on local ordinances and disclosures that can have an effect on the sale of the property.
About Associations Liability Insurance Agency (ALIA)
The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive liability insurance they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. For more information about our products and services, contact us today at (800) 882-4410.