Real Estate Agent Disclosure Requirements

Ensure you know the common disclosures in real estate before you buy or sell a home. This way, you won’t leave anything out! Here we will learn all about Real Estate Agent Disclosure Requirements. Let’s start!

 

What Is the Description of Real Estate Agent Disclosure Requirements?

A real estate disclosure requirement mandates that prospective buyers know specific property information. States and provinces have different standards, but they usually include the following:

• Information about the property’s condition,
• History,
• And potential risks.

Some examples of the information required include:

• Environmental hazards such as mold
• Issues with foundations
• Malfunctioning roofs, plumbing, or electrical system
• Property is subject to litigation or liens.
• Zoning or land use restrictions

Real estate disclosure laws often need that sellers provide the buyer with a written disclosure statement. It typically provides information about any known defects, problems, or enhancements to the property.

 

What Are the Impacts of Real Estate Disclosure Standards?

A real estate disclosure regulation serves several purposes, including protecting buyers from unintentionally buying a house with significant faults or risks. Purchasers can make informed decisions when sellers disclose known property defects.

Besides protecting buyers, real estate disclosure regulations protect sellers as well. A seller reduces the likelihood of being sued for omitting facts in the future if they discuss any known faults with the property upfront. As a result, costly legal fights can avoid, and the transaction can progress smoothly.

 

In What Ways Are Real Estate Agents Responsible for Disclosing Information to Prospective Clients?

 

Disclosing Council Approvals (or their absence)

It is necessary to get different approvals from councils for various projects. Developing approvals are necessary for some, building approvals need others, and ‘accepted development’ approvals are necessary for others.

Several works need disclosure to the buyer, including:

• Structures (carports, sheds, retainer walls),
• Driveways,
• Fencing,
• The second dwelling (or conversion to dual occupancy).

Purchasing without the necessary approvals can have serious consequences for the buyer.

 

Disclosable Disputes – Trees and Fences

Suppose the property has been subject to any application or order made by Queensland Civil and Administrative Tribunal (‘QCAT’) about a tree. In that case, the Real Estate Institute Queensland (‘REIQ’) Contract requires the disclosure.

According to Section 83 of the Neighborhood Disputes Act 2011, the buyer can stop the contract if this advice does not exist. It is important to inform potential buyers about potential issues before contracts are signed if the agent knows them. It is the buyer’s responsibility to be aware of any information likely to influence an agent’s decision to buy or not buy the property by the seller.

 

Duty to disclose special levies, pending issues, etc., of the Body Corporate.

For the sale of a unit under a Community Title Scheme, the REIQ Contract requires several statutory warranties. You can find these warranties in the contract or attached as a Disclosure Statement.

Suppose the corporate body plans extensive work for the common property. For example, that will result in extra special levies. In that case, agents must be careful not to disclose information that may affect future purchasers.

 

Disclosure of murders and suicides on the property

When agents know a property’s history, they must be extremely cautious. Because it may lead to purchasers not proceeding or may alter the property’s value profoundly. In these circumstances, the best policy would be to inform prospective buyers about the issue.

You risk possible prosecution if you fail to disclose the history and are joined by the purchasers in court proceedings if they seek to overturn the contract if you fail to disclose the history.

 

Disclosure of ‘material facts

Agents must also disclose other issues, including false, misleading, or deceptive information about a property. The duty of disclosure applies to any false, misleading, or deceptive issue.

An agent should be aware of the danger of misleading a prospective buyer into buying a property if they fail to disclose a “material fact.” They should have disclosed an important fact to the buyer, which could have caused them not to proceed. In the same way, this also applies to agents who do not speak out about certain issues.

 

The Most Common Real Estate Disclosures

Disclosures will differ greatly depending on the type and location of the property. This is because each state and county have a different disclosure law. In California, disclosure agreements are strict.

 

 

Disclosement of natural hazards

Identifying hazard areas is first on the list. Agents and sellers must disclose if the property lies near a state or local hazard area.

The following hazards are common to report:

• Faults in earthquakes
• Zones of seismic activity
• The floods
• Fiery wildfires
• Fire hazards, in general
• Contamination of the environment

It is a need of California law that buyers receive a Natural Hazards Disclosure.

 

Advisory on Market Conditions (MCA)

As the name implies, a Market Conditions Advisory covers items of a more financial nature, including:

• Loans,
• Appraisals,
• Home inspections,
• And contingency deadlines.

The MCA aims to make all parties aware that there are no guarantees on the house’s value. This residential property disclosure warns about the risks of buying and selling a home. It mentions the possibility that market conditions can change unexpectedly and that it is impossible to predict the future.

The seller’s choice is whether to accept the asking price. This is a warning from the MCA to buyers about making multiple offers. It is not mandatory by California law to complete the MCA, but it is generally beneficial.

 

Disclosure of state transfers

In California, all home sales must include a transfer disclosure statement (TDS) indicating the home’s condition. TDS documents are mandatory for every residential seller to provide to the buyer. This document will disclose all major defects at the property to the buyer.

The disclosure statement for the residential property includes all appliances, wiring, detectors of smoke, and other objects that are staying in the home. The seller should fill out the information thoroughly, and the buyer should also review it.

 

Disclosure of local transfers

A few details in this seller’s disclosure pertain specifically to the neighborhood or community where the property lies.

A local transfer disclosure can include the following:

• Information about neighboring land.
• Airport influences.
• Rental zone rules.
• Other aspects of the neighborhood that may affect a buyer’s quality of life.

There are local regulations and recommendations about local transfer disclosures.

 

Disclosures of Megan’s Law

Under Megan’s Law, every state must disclose information about registered sex offenders in their areas. State laws determine what disclosures should include. It is mandatory to disclose Megan’s Law in California.

Instead, the buyer must check the online California database for registered sex offenders. Ensure that you review your property disclosure database before signing! You waive your right to contest your property disclosure.

 

Effect Of Withholding Information.

It is possible for a buyer to sue a seller for damages or to revoke the deal whenever a seller does not disclose important property information. Depending on the jurisdiction, the buyer may also have legal recourse against the seller. Some vendors may also be subject to fines and other penalties.

 

How Should Purchasers Act?

Ensure that you have obtained all disclosures before making an offer. Ask your real estate agent or lawyer about the disclosure laws where you are purchasing real estate. The failure to provide essential information after the deal has closed may give you legal recourse.

 

How Should Sellers Act?

Sellers must always disclose all relevant facts and information about their properties. Even if that may discourage buyers from submitting offers.

Having the help of a real estate agent or lawyer can help ensure that you are following all disclosure laws in your jurisdiction. And that you keep all sales-related paperwork, as you may need it in the future.

 

How Should a Real Estate Professional Deal with the Non-Disclosure of Material Information?

There may be grounds for a lawsuit by the buyer or seller if the agent or broker fails to disclose all required information. This may include the following:

• Economic Damages: including lost profits and repair costs;
• Non-Economic Damages: Compensation for pain and suffering resulting from fiduciary breaches; or
• Punitive Damages: Available only in cases of serious non-disclosure. In these damages, egregious behavior is punished, such as failure to disclose a known defect that caused severe health problems for the buyer.

Getting everything in writing is highly important if a seller needs to disclose it fully. You should keep all records and documents about dealings with real estate professionals. In addition to home disclosure forms, conversations about offers are essential documents.

 

Bottom Line

To protect buyers from cheating, sellers must disclose defects in residential properties. California Realtors recommend that real estate agents use the Seller’s Property Disclosure form to protect themselves. Agents that do not disclose defects may be liable for cheating the buyer.

Ensure no errors occur in the form by reviewing it closely with the seller. The buyer handles informing the potential buyer of material defects in the property if they do not appear in the form. Agents still determining what to disclose should consult their brokers or a real estate lawyer to figure out what to reveal.