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Residential Real Estate
October 3, 2018
Property Disclosure and Liability

Property Disclosure and Liability - Material Facts and Agent Duties
Duty to Disclose?
Is a real estate broker, who is employed by the seller or buyer, under a duty to disclose? (Could be variations from one state or provincial jurisdiction to another).
"Facts materially affecting the value of the property" known to the agent.
Facts the agent should know based on standards of practice in their locale
Facts that could have been determined by a reasonable and diligent inspection of the property by the agent?
Must agents, in the sale of residential real estate, identify any red flags?
Yes.
The Landmark Case - Easton Vs Strassburger (1984), greatly expanded agent and broker liability and placed new disclosure requirements upon licensees involved in residential sales. Licensees were now liable for not only what they knew about a property, but also what they "should have known."
As a result of the Easton Case, California real estate licensees must conduct a "reasonably competent and diligent inspection of properties sold," and fill out the disclosure form.
Possible Short List of Red Flags
Stains and discoloration on ceilings and walls
Unusual odors
Bowing foundation walls
Grading sloping toward the house
Multiple layers of roofing; dirty or missing gutters
Push button light switches/knob and tube wiring/no GFCI
BUGS (or evidence of them) in the house (I'm bug-phobic!)
Uneven settling - walls or floors
Peeling paint
Cracked slab
Additions added on illegally
Front yard issues, culverts or utility boxes that affect the value
Front, side or rear set back issues
Can you think of any other red flags?
Duty to Disclose?
Is a real estate broker, who is employed by the seller or buyer, under a duty to disclose? (Could be variations from one state or provincial jurisdiction to another).
"Facts materially affecting the value of the property" known to the agent.
Facts the agent should know based on standards of practice in their locale
Facts that could have been determined by a reasonable and diligent inspection of the property by the agent?
Must agents, in the sale of residential real estate, identify any red flags?
Yes.
The Landmark Case - Easton Vs Strassburger (1984), greatly expanded agent and broker liability and placed new disclosure requirements upon licensees involved in residential sales. Licensees were now liable for not only what they knew about a property, but also what they "should have known."
As a result of the Easton Case, California real estate licensees must conduct a "reasonably competent and diligent inspection of properties sold," and fill out the disclosure form.
Possible Short List of Red Flags
Stains and discoloration on ceilings and walls
Unusual odors
Bowing foundation walls
Grading sloping toward the house
Multiple layers of roofing; dirty or missing gutters
Push button light switches/knob and tube wiring/no GFCI
BUGS (or evidence of them) in the house (I'm bug-phobic!)
Uneven settling - walls or floors
Peeling paint
Cracked slab
Additions added on illegally
Front yard issues, culverts or utility boxes that affect the value
Front, side or rear set back issues
Can you think of any other red flags?

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Written by
Saul Klein
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