What Are the Required Disclosures?
Q: Must a buyer’s agent research potential problems with wells, septic systems, land titles, taxes, wood-destroying insects and potential development in the area?
A: A buyer agent’s expertise lies in assisting a buyer in finding a property. It does not lay in the areas of title searcher, home inspector, pest inspector, tax advisor or zoning enforcement officer. In fact, should a buyer agent undertake to perform any of these services, Connecticut law will hold the buyer agent to the same standard as an expert in these areas. This is not to say that a buyer agent should ignore these areas. The buyer agent should refer the buyer client to the appropriate professionals to obtain information and advice in those areas that are crucial to a buyer’s decision to purchase but in which the buyer agent does not possess specialized knowledge. The buyer agent should also see that appropriate contingencies are included in the purchase agreement to allow the buyer to consult with outside experts.
REQUIRED DISCLOSURE: Seller’s Agent
· Disclosure of all offers
· Buyer’s ability to offer a higher price (in most states)
· Disclosing names of prospective buyers as well as any relationship, such as buyer is related to licensee
· Disclosure of known material defects in property
REQUIRED DISCLOSURE: Buyer’s Agent
· Disclosing property deficiencies
· Disclosing provisions of offer to purchase that are not favorable to the buyer
· Recommending the lowest price the buyer should offer regardless of the list price
· Disclosing how long the property has been listed.
· Disclosure of the agency relationship is required in every state; it is generally required at the first meaningful contact with a buyer or seller.
· Dual agency is not allowed unless all parties agree to it, however, dual agency is illegal in some states. The disclosure should be made before the individual discloses any confidential information to the broker.
Latent Defects: A latent defect is a hidden structural defect that would not be discovered by ordinary inspection, such as a part of the property being built partly on an adjoining property or a zoning violation.
· Seller has duty to discover and disclose any known latent defects that threaten personal safety or structural soundness.
· Buyers have been able to receive damages or terminate the offer to purchase in case where a seller did not reveal known latent defects.
· Some states require a seller of residential property to provide a property condition report for all prospective buyers.
· Some states also require the licensee to discover and disclose an prospective buyers any material facts that may affect the property’s desirability or value in spite of the seller’s lack of knowledge or failure to disclose.
Residential Lead-Based Paint Hazard Reduction Act: The listing broker and selling broker, if a subagent, must inform the seller or lessor of their obligations for environmental disclosures under the Residential Lead-Based Paint Hazard Reduction Act of 1992 for dwellings built prior to 1978: Homebuyers must be alerted to any lead-based paint or related hazards.
· Homebuyers must be given an agreed upon time period for the opportunity to conduct a lead-based paint inspection or risk assessment at their expense.
· A Certification and Acknowledgment of Disclosures must be attached to the offer to purchase.
· A copy of the Certification and Acknowledgment must be kept by the seller and both agents for three years after closing on the beginning of the lease.