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Disclosing Material Facts and Hidden Defects
When a buyer is looking for a dream home,
the last thing he expects to find is a
material defect that will change the dream
into a nightmare. To avoid that scenario, a
real estate agent has an obligation to make
a full and timely disclosure of all known
facts that are relevant or material to the
condition and characteristics of the
property under consideration.
Material
Facts
A material fact is one that a reasonably
prudent person would want to know before
deciding whether to buy the property being
offered or to accept an offer to sell.
Material facts include information that
would affect the decision as to the value of
the property being sold or the value of
property being offered in trade. |
Material
Facts include, among others:
- Property defects that are latent
structural defects
- Major repairs that have recently
been completed
- Defects in title
- Problems disclosed in a survey
of the land
- Flood plain and environmental
issues or conditions
- Zoning or building code
violations
- The existence of tenants and
leases
- The agent's opinion as to the
property's value
- The other party's financial
condition and motivation to buy or
sell, including any time constraints
- Possible negotiating positions
- Existence of a family
relationship between the other party
and the agent
- The existence of a financial
relationship or commission splitting
arrangement between the buyer's
agent and the seller or the seller's
agent
- Existence of other offers
- Status of earnest money deposits
- All provisions of the contract
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Actual and
Constructive Knowledge
An agent who has actual knowledge
of a material defect has an obligation to
disclose that information to the buyer. If
that information is not disclosed, the agent
may be subject to liability in a civil
court. An agent may be subject to civil
liability if the agent's particular
expertise in real estate should have put him
on notice of a defect or of a duty to
conduct a further investigation of a
condition or characteristic of the property. |
Full
Disclosure
A seller's agent must disclose all
material facts, regardless of when they are
discovered and even if the information may
adversely affect the completion of the sale.
The facts must be disclosed even if the
seller does not agree to the disclosure and
instructs the agent not to disclose.
Many states have a checklist form
that is completed by the seller, with
the agent's help, that states that (1)
items checked have been inspected by the
seller; (2) the seller is not aware of
any items that are not in working
condition, or a description of items
that are not in working condition; and
(3) an itemization of known defects or
malfunctions in the structure and a
description of the defects. |
Liability for
Nondisclosure
A seller's agent who has actual or
constructive knowledge of defects may be
liable to the buyer. The buyer may obtain
relief through arbitration or mediation, if
the contract contains an arbitration or
mediation clause, or by filing a civil
lawsuit against the seller, the agent, the
broker, or any combination, depending on who
failed to disclose material facts or hidden
defects. |
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Cameron, Davis, Gonzalez & Marroney has its
principal office at 901 N. Olive Avenue, West
Palm Beach, Florida, 33401. We represent our
clients before Federal and State Courts in
Miami, Fort Lauderdale, West Palm Beach,
Martin, and St. Lucie counties, Vero Beach, and
all family courts throughout the state of
Florida. |
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Cameron, Davis, Gonzalez & Marroney practices in the following areas of law: General Civil Trial Practice, Corporate, Business Law, Contracts, Real Estate, Personal Injury, Wrongful Death, Criminal Law, Commercial Litigation, Construction Law, Medical Malpractice, Family Law, Divorce and Child Custody. |
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