Full Disclosure Requirements for Real Estate Brokers and Agents
What is “Full Disclosure”?
Full disclosure refers to the general need in any business transaction for all parties to be truthful and forthcoming regarding any material issue related to the transaction. Often times the full disclosure requirement is reinforced through a provisions contained in a contract between the parties. A party could be subject to legal liability if they have failed to disclose any concealed facts or have knowingly falsified information.
Alternatively, the parties can agree to sign a separate full disclosure agreement, which is a form that states that the parties will disclose any relevant information that may influence the transaction. The agreement should outline what type of information needs to be disclosed. It should also state what course of action to follow should there be a violation of full disclosure standards.
What Kinds of Information must a Real Estate Agent or Broker Disclose?
In real estate transactions, full disclosure typically refers to the requirement that sellers disclose any defects involved with the property. However, many transactions are mediated by a real estate broker or their agent, who will be communicating important information between the buyer and the seller.
All real estate brokers and agents also have a duty to fully disclose any important information regarding the buyer and the seller.
If the real estate agent is representing a buyer in the property transaction, they have a duty to disclose information such as:
- Whether the seller is willing to accept a lower offer
- Facts or data describing the urgency of the seller’s need to complete a sale
- Whether the broker has any interest in the property being sold or any personal relationship to the seller
- Figures and estimates of the value of the property
- How long the property has been up on the market
- Updates on any current offers and counteroffers that have been placed on the property
- Any other important information that would allow the buyer to finalize the sale at the lowest price and in terms that are most favorable to the buyer
Similarly, if the agent or broker is representing the seller in the transaction, they have a duty to fully disclose such information as:
- Whether or not the buyer would be willing to pay more for the property interest than what was previously offered
- Facts related to the buyer’s urgency to obtain the property
- Whether they have had any previous or existing personal relationship to the buyer
- Data related to the buyer’s financial ability to complete the purchase
- Any other figures or estimates that would affect the seller’s power to complete the sale at the highest price and in terms that are most favorable to them
Because they may be interacting with both the buyer and seller in a transaction, it is possible for a broker to be held liable to both of them in the event of a violation. In this case it may still be necessary for the seller and buyer to be represented by different lawyers, especially if there may be conflicts of interest between the various parties.
What if My Real Estate Broker or Agent has Violated Full Disclosure Standards?
Therefore real estate brokers and agents carry a great responsibility of ensuring that their client enters into the transaction fully informed. Whether they are representing buyer or seller, both parties should know all the facts related to the sale or purchase of the property.
If your real estate broker or agent has violated full disclosure requirements, you may be entitled to damages in a court of law. For example, a seller may be able to recover any projected profits that were lost due to the broker’s failure to disclose valuable information. This would usually be calculated according to the fair market values and rates that are applied to the particular neighborhood where the property is located.
Also, if the broker’s violations are the result of any malicious or criminal intent, it may be possible to recover other types of damages such as punitive damages.
If you suspect that you have incurred losses or lost opportunities due to your real estate agent’s actions, you should keep all records and document related to your dealings with the agent. Be sure to gather important data such as any prices that were presented to you, dates of offers and acceptances of offers, and written reports of any suspicious or questionable figures.
Do I Need a Lawyer for Conflicts over Full Disclosure Requirements for Brokers?
When working with a real estate broker or agent, you should double check the information that they provide to you. You may wish to hire a property appraiser for a second opinion, or speak with a lawyer regarding your rights as a buyer or seller. A real estate lawyer can help protect your interests by confirming that all information has been properly disclosed to you. Also, if you need to draft full disclosure agreement, an attorney can create one that is specific to your circumstances.
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Last Modified: 04-21-2014 06:30 PM PDT
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