Marianne, Home Buyer in Port Charlotte, FL

Responsibility of bank and listing agent to state on their listing that there is a problem with a house

Asked by Marianne, Port Charlotte, FL Thu Jan 27, 2011

I was in contract with a bank. I chose to have all inspections done. I found out the property needed a new septic system. I cancelled my contract because of that problem. The bank and listing agent were told of this problem. They relisted the house without disclosing the problem. Isn't there a law requiring them to state that in the listing when they received notice of such? How many more people will lose their money due to having an inspection when the bank and listing agent know about this problem. It's not fair the the buyer. Very unprofessional. That has left a very bad taste in my mouth about listing agents.

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We are in total agreement with you....because the property is being offered "AS IS" should not allow the selling parties to feel they can exploit people. I have seen the same thing done in your location done with regards to "Chinese drywall." It just isn't right!

Any one willing to conduct business in this manner should be exposed and avoided.


Michael Saunders & Company
2 votes Thank Flag Link Fri Jan 28, 2011

YES, when listing agents become aware of defects in the property they must be disclosed. The situation is much easier to handle with traditional sales since the owner completes the disclosure. But when it comes to Bank Owned foreclosures they disclose having no knowledge since they have never seen the property, that is when getting a reliable home inspector is imperative. I have seen foreclosure listing agents ask for the inspectors report in order to cancel an contract, but I have also seen a few say....we don't need to "see anything", just fax in the cancellation. So as a buyer, protect yourself.

Tony Vega
Charles Rutenberg Realty
2 votes Thank Flag Link Fri Jan 28, 2011
If the listing agent received a report they MUST disclose all defects to any new potential buyer. All listing agents are not like this, ofr a matter of fact most listing agents will follow the letter of the law and only a few may either not be aware of the law or just outright violate it. Where the seller is a bank, they have as addendums out the "wazooo" so it is even more the agent who will be on the hook if found out by the buyer that it was not disclosed,

Please see my blog for tips and advice on buying bank owned homes.
2 votes Thank Flag Link Fri Jan 28, 2011

Disclosure of any defects that materially effect the value of a property are to be DISCLOSED by the SELLER. The seller has the obligation to disclose any and everything, even if it was fixed like a leak, or a termite problem.

A listing agent may NOT be aware of issues that are disclosed. HOWEVER, in the example you give, a defect was brought forward by your inspection. YES that would need to be disclosed in writing along with the remedy if any to a future buyer.

Are you sure it was relisted without disclosing? It would be in the sellers property disclosure that SHOULD be given to any buyer before writing a contract.

By the way, listing agents are like any other professional...there are good ones and some that still need a little work to be good.

You learned a valuable lesson here....hopefully buyers reading this will also learn to:

ASK FOR THE SELLERS PROPERTY DISCLOSURE BEFORE WRITING AN OFFER. For one thing, you may want to put repair provisions in the offer.

When we list a property, we attach the sellers property disclosure, the property tax record and the customer of the MLS along with a photo flyer all together and have these "packages" available to buyers when they look at the house. You can not give a potential buyer TOO MUCH Information on a property they are considering.

Debbie Albert, PA
Keller Williams of the Treasure Coast
Web Reference:
2 votes Thank Flag Link Fri Jan 28, 2011
Hi Marianne, as The previous agent stated and in my original answer it is legally and ethically the sellers and the sellers agent to disclose any known defect. I am sure a call to FREC will get everyones attention if not changed in a very short period of time by the seller and their agent.
2 votes Thank Flag Link Fri Jan 28, 2011
They are required to disclose any known defects. Ethically and very likely legally, this could come back to haunt them and cause problems, especially for the listing agent.
Web Reference:
2 votes Thank Flag Link Fri Jan 28, 2011
Hi Marianne, when the homes are listed on the MLS it will state that the lender has never occupied the property therefore there will not be a property disclosure statement and that they have no knowledge of any defects. You will buy the home as is with the right to inspect and the responsibility is that of the buyers to find out what problems exist. Now, if an inspection is done and issues do come up such as a bad roof, that will now have to be disclosed if you decide not to buy and the other agent is made aware of it. I work in Port Charlotte and would enjoy helping you find your home here. ITS A GREAT TIME TO BUY!!
2 votes Thank Flag Link Fri Jan 28, 2011
State laws vary, and I'm not licensed in FL, so it could be different, but in most places I'm aware of Agents are required to disclose any material defects inherent in a property. I would suspect a failed septic would fall under this category. Did you receive any sort of disclosure regarding the home? In some cases, like bank owned homes they may be exempt from completing a disclosure form since they never lived in the house, but I still believe an agent would be required to disclose this as a material fact if they knew.
What does your agent say? If you can prove the listing agent had prior knowledge and didn't reveal this to you prior to writing your offer it may be worth discussing the matter with them and their broker. Your agent should be the one to start this process.
2 votes Thank Flag Link Fri Jan 28, 2011
if they have been informed of a problem and/or the problem is not capable of being detected through plain sight, then they must disclose.
1 vote Thank Flag Link Thu Dec 8, 2011
Hi Marianne,

Ask your agent to see if the house was ever "pending" sale prior to your contract. If so, the agent may have been aware of the defect and did not disclose if a prior buyer backed out for the same reasonI hope that isn't the case but ask your agent to check the history on the MLS system. If it was pending sale, you may have a case against the agent and may be able to get your inspection costs back! I'm not an attorney so you'll need to check with an attorney. You could also go it alone in Small Claims court.

Best of luck and if you pursue another bank owned listing, maybe it's a good idea to put a request "in writing" via email/fax to the listing agent that you would like to see any/all inspection reports.

Best of luck,
1 vote Thank Flag Link Fri Jan 28, 2011
While i agree with most of what I read here, even if the listing agent disclosed the fact that another independent inspection reported that the septic system needed to be replaced, me as a buyers agent I would still recommend to any of my buyers to still have their own inspectors inspect the house. On many occasions I've had opposing views from multiple professionals over an inspection issue. Now granted if a buyer knows about a problem ahead of time they may chose to avoid the house totally and not have an inspection but just because you know of a problem doesn't mean that you should neglect getting your own team of professionals in to take a look. For example Marianne if I told you that house "A" was an absolute steal at a price of let's say $50,000, I would expect you to get a second opinion from an agent that you are comfortable with or know well. Why? Because you don't know me from a hole in the ground. Same thing with the report you got on the septic system. I don't know your inspector or how competent they are so I'd still have the inspection done (if and only it I really wanted the house) Now obviously I would take a heed of caution and the septic system would be an area of concern because of your report. Now with regards to the listing agent, yes they should provide any potential buyer a copy of the prior home inspection before or prior to a buyer making an offer) (the defect DOES NOT have to be disclosed in the listing) but again it does have to be disclosed to any buyer who is considering making an offer. Being a bank owned property chances are you will not have a sellers disclosure however because the listing agent has been alerted and therefor has knowledge that there MAY BE a septic issue he/she has the legal obligation to disclose the issue regardless if the bank decides to or not. If not then the listing broker and seller(bank) can find themselves in hot water.
0 votes Thank Flag Link Wed Apr 27, 2011
In Florida, is this something that would be disclosed on the listing, or on a separate disclosure form?
0 votes Thank Flag Link Fri Jan 28, 2011

You make a very good point. This is a very popular question from buyers and R.E. agents.

The short answer is yes they should disclose.

The longer version is we have never experienced a market with so many foreclosures.

In the past foreclosures were mostly purchased by investors and when you invest there is risk.

Today traditional purchasers of homes, like yourself, want investor pricing and assurances from the seller.

That will not happen.

The best thing for a buyer to do is try to find an owner/seller who is willing to sell their home at a reduced price. This home should be well maintained and fully disclosed.

In the long run you could actually get a better overall value.

Ray Levy

Coldwell Banker Camelot Realty
Mount Dora, FL 32757
0 votes Thank Flag Link Fri Jan 28, 2011
As you see by now you are right it must be disclosed. However there are some agents that will not disclose in the listing but do have it in the seller's disclosure. In the MLS there are some notes that are only seen by agents and not by the general public. Trying to be positive they may have disclosed it there so that buyer's agents will be aware of it. It would then be their responsibility to tell their clients.
I like to think that agents are doing their jobs, but even if he or she did not I hope that you will not judge the basket by one bad apple.
0 votes Thank Flag Link Fri Jan 28, 2011

Typically, when a bank, lender or almost any other 3rd party sells a property- they sell "as-is" ~ the reasons are several... primarily, it is because they (THE LENDER) have never occupied nor even seen the property.

In more cases than not- malicious damage is done to the home or apartment. I've seem kitchens tore up from the floor up, walls destroyed, appliances removed, lavatories removed and the property in shambles.


0 votes Thank Flag Link Fri Jan 28, 2011
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