Realtor Sold Own Home. Then This Happened
When Realtors sell their own properties, do they have the same duty to disclose its condition as they would when representing a seller? Read more to find out.
Dear Shannon: I am a Realtor® and listed my home through my brokerage firm and filed it with the MLS. A buyer, who is also a Realtor, expressed interest in purchasing my property. We agreed on terms and had a smooth closing. Or so I thought.
A few months later the buyer called me about the roof leaking, saying I knew it was defective. The buyer accused me of not disclosing the problem during inspection. The buyer also claimed a contractor recommended a full roof replacement and asked me to pay for it. I refused. In my opinion, I was under no obligation to disclose the leak since the buyer had an inspection, even though I knew about it and didn’t say anything.
When the buyer threatened to file an Ethics complaint, I argued I was selling my own home and not representing anyone as a Realtor, so I was not bound by the Code of Ethics. Please educate the buyer for me. – Not Bound
Dear Not Bound: Thank you for reaching out. You’ve asked me to educate the buyer, when, candidly, it sounds like you are the one who needs the education.
Let’s think this through and see what sections of the Code might apply to your situation. (Note: Other laws may apply, but for this article we are focusing only on the Code.)
First, let’s look at relevant parts of Article 2 of the Code and then we’ll focus on Article 1, specifically Standard of Practice (SOP) 1-1.
Article 2 says, “Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00)”
The first part of Article 2 uses the word “shall,” indicating this is not a suggestion. A defective, leaky roof is clearly a pertinent fact about the property. You knew the roof was defective and didn’t tell the buyer, which is concealing a clearly pertinent fact about the property.
Examine the language of Article 2 again and notice it says, “Realtors shall avoid concealment of pertinent facts relating to the property.” In your scenario, both you and the buyer are Realtors. So, certainly, Article 2 applies to your situation. Or does it?
Let’s see if another part of the Code helps address this issue and tells us if this is going to be a problem for you. Standards of Practice serve to clarify the ethical obligations imposed by various Articles. Under Article 1, SOP 1-1 is on point for your situation.
SOP 1-1 states, “Realtors®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)”
There it is in plain language. SOP 1-1 says as a principal in the transaction you remain obligated by the duties imposed by the Code.
When you sell your own property as a Realtor, you have the same duty to disclose its condition as you would when representing a seller.
Unfortunately, you wrongly thought it was okay to keep quiet about the defective roof. So, this is likely going to be an issue for you under both Article 1 and 2 of the Code.
Inspired by Case 2-13: REALTORS® Buying and Selling to One Another are Still Considered REALTORS®. Other laws and rules apply.
Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Advice deemed accurate on date of publication
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