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Full Disclosure Requirements for Real Estate Brokers and Agents
Why Is “Full Disclosure” Important?
Under state and federal laws, realtors and real estate brokers must disclose certain information to buyers and sellers. Full disclosure provides parties with the information needed to properly negotiate price and assess the property’s suitability for their needs. Your agent should disclose all identified hazards on a property—as well as other factors that may impact the property’s price.
What Kinds of Information Must a Real Estate Agent or Broker Disclose?
In real estate transactions, full disclosure typically means that the seller must disclose any property defects and any other important information that could have an effect on a party’s decision to enter into the deal.
Disclosing Known Hazards and Defects
Under federal law, you must disclose the presence of lead-based paint if your house was built before 1978. Additional state disclosure laws vary dramatically. Depending on where you live, you may have to disclose material defects involving:
- Termite, pest, and mold issues,
- Structural defects (such as roof and foundation issues),
- Sewer and plumbing issues,
- Natural hazard risks (such as being located within a flood or seismic zone),
- The presence of convicted sex offenders in the neighborhood (under Megan’s Law), and
- Any other relevant issues.
Sellers and real estate agents must disclose known defects and hazards. (You do not have to search for unknown defects.) However, it is always in your best interest to disclose all known and suspected hazards. Failure to disclose can result in a failed sales transaction and litigation.
Typically, disclosures must be in writing. Most states have a standard form that you must complete and provide to any prospective buyers. Your real estate broker should provide you with a property disclosure form and may assist in its completion.
Disclosing Other Factors
- All offers that are made on a piece of property,
- The buyer’s willingness to increase an offer,
- The seller’s willingness to accept a lower price,
- Whether the seller has an urgent need to sell the property,
- Whether the broker has any conflicts of interest,
- How long the property has been on the market,
- Estimates of the property’s value, and
- Updates on offers and counteroffers that are made.
What If My Real Estate Broker or Agent Has Failed to Fully Disclose?
- Economic damages: compensation for lost profits, repairs, and other out-of-pocket expenses,
- Non-economic damages: compensation for your pain and suffering, and
- Punitive damages: compensation that punishes the agent for intentional and very serious non-disclosures.
If you believe that you suffered losses due to a real estate agent’s actions, keep all records and documents relating to your dealings with the agent. Be sure to gather important data such as any prices that were presented to you, dates of offers, acceptances of offers, written reports that have suspicious or questionable figures, disclosure statements, and home inspections.
Do I Need a Lawyer?
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 real estate lawyer regarding your rights as a buyer or as a 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 a draft of a full disclosure agreement, an attorney can create one that is specific to your circumstances.