Erin Murphy, Other/Just Looking in New York

If the real estate agent representing the buyer knows of a flooding problem, must they disclose this information to the buyer?

Asked by Erin Murphy, New York Thu Jan 24, 2013

Is it unethical if they do not?

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21
Tammy C. Benkwitt’s answer
BEST ANSWER
As a matter of ethics, the buyers agent must disclose KNOWN pertinant facts. The agent cannot speak outside his or her field of expertise. Most agents are not home inspectors, thus most agents will recommend to their buyer clients to have a house inspected prior to signing a contract of sale.
4 votes Thank Flag Link Fri Jan 25, 2013
It is unethical and downright actionable. But first, a question. Is this a single family residence or a coop, condo? If it's a house, the seller is required to prepare a multi-paged "property disclosure form" that would state any know defect. This form is to be given to a buyer prior to any contract of sale being signed. If this form is not given, the seller is required to give the buyer a $500 credit at closing. This document doesn't mean you shouldn't have a house inspected. You absolutely should have it inspected regardless.

If this is a Coop or Condo and any resultant flooding is the result of the recent Hurricane "Sandy," the issue may not be so readily apparent. The building may not be in a "flood zone." I would advise you consult with your Attorney. Good luck.
2 votes Thank Flag Link Thu Jan 24, 2013
The law requires that the sales agent and the owner disclose all KNOWN issues which they have a DIRECT knowledge of.
2 votes Thank Flag Link Thu Jan 24, 2013
Erin,

Absolutely, the Buyers agent most disclose all facts known to the agent. We are not Home Inspectors but the Buyers agent will advise the Buyer to get a Home Inspection on the property. Its un ethical to conseal any pertinent facts known on any property that the Buyers agent might be aware of.

The buyer's agent owes his/her FIDUCIARY duties to the BUYER. Therefore, legally and ethically, this has to be disclosed as it is considered as a material fact that will affect the buyer's decision.


Best of Luck!

Millie Valentin
Certified Buyer Representative (CBR)
Exit Realty Search
3928 E. Tremont Avenue
Bronx, NY 10465
email: exitwithmillie@gmail.com
http://www.ExitRealtySearch.com
1 vote Thank Flag Link Sun Feb 24, 2013
Yes. Regardless of whether the agent represents the buyer or the seller, the broker is responsible for disclosing known (material/important latent/hidden) defects to the buyer. If the broker knows or has reason to know that the seller has indeed made a misrepresentation or failed to disclose material facts, the broker is required to make full disclosure.
1 vote Thank Flag Link Sun Jan 27, 2013
thats correct
Flag Sun Jan 27, 2013
Although this has been answered before, you have a good answer. It's always best to disclose, disclose, disclose.
Don
Flag Sun Jan 27, 2013
What makes you think that they would know about it, Erin, when the seller and the listing agent haven't disclosed it?
1 vote Thank Flag Link Sat Jan 26, 2013
Was the damage visible and extensive, what did the buyer's inspection report conclude....consider discussing with your attorney...
1 vote Thank Flag Link Thu Jan 24, 2013
Flood Insurance can cost up to thousands of dollars in premium every year. This is a material fact that needs to be disclosed. If the buyer's agent knows about it, he/she is not fulfilling his/her fiduciary duty to the buyer/client if he/she by not disclosing it.

It a code of ethics violation of Article 1 *When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client*. and 2 *REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS®.*
1 vote Thank Flag Link Thu Jan 24, 2013
the buyer's agent has to act in best interest of his client (buyer) and disclose all known facts or defects that may impact their purchase decision
0 votes Thank Flag Link Fri Apr 12, 2013
My answer will be specific to the details you presented. You stated that the buyer's agent has the knowledge of a flooding problem. And your questio is if she/he has to disclose this to the buyer.

In this situation, the buyer's agent owes his/her FIDUCIARY duties to the BUYER. Therefore, legally and ethically, this has to be disclosed as it is considered as a material fact that will affect the buyer's decision.

Best.

Maria
0 votes Thank Flag Link Sun Feb 24, 2013
The Buyer's Agent may not be informed as to the full condition of a property being shown if it is their first time showing the property. However, some brokers may be very familiar with a specific property - as they may have sold the property previously. As such, they may be privy to certain conditions of the specific property and should disclose the information as a ethical duty), However, In New York State: The Seller's Broker is required to supply a "Property Condition Disclosure Statement" which is to be completed by the Seller/Owner of the property and given to the Buyer/Buyer's Broker - prior to contract signing. (- of which the First Section of page 1 of 6 pages -- is recreated below). The statement lists several questions covering several categories of issues to be disclosed such as General Information; Environmental Information; Structural and Mechanical Systems and Services of the property - to which the Seller must answer and Certify as to the truthfulness of their answers with their signature(s).

However, TAKE NOTICE THAT THE FORM ALSO SPECIFICALLY STATES THAT THE BUYER SHOULD PURSUE THEIR OWN INDEPENDENT INSPECTION OF THE PROPERTY - DESPITE THE DISCLOSURE. (THIS IS REFERRED TO AS PERFORMING DUE DILIGENCE) [EXCERPT FROM THE FORM IS BELOW]

Property Condition Disclosure Statement

Name of Seller or Sellers: ___James and Jane Doe____________________________________
Property Address: _________123 Anywhere Street, _____________________________________
________________________,Any County, New York___________________________________

"General Instructions:

The Property Condition Disclosure Act requires the Seller of residential real property to cause this disclosure statement or a copy thereof to be delivered to a buyer or buyer’s agent Prior To The Signing By The Buyer Of A Binding Contract of Sale.

Purpose of Statement:

This is a statement of certain conditions and information concerning the property known to the seller. This Disclosure Statement is not a warranty of any kind by the seller or by any agent representing the seller in this transaction.

IT IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR TESTS AND THE BUYER IS ENCOURAGED TO OBTAIN HIS OR HER OWN INDEPENDENT PROFESSIONAL INSPECTIONS AND ENVIRONMENTAL TESTS AND ALSO IS ENCOURAGED TO CHECK PUBLIC RECORDS PERTAINING TO THE PROPERTY.

A knowingly false or incomplete statement by the seller on this form may subject the seller to claims by the buyer prior to or after the transfer of title. In the event a seller fails to perform the duty prescribed in this article to deliver a Disclosure Statement prior to the signing by the buyer of a binding contract of sale, the buyer shall receive upon the transfer of title a credit of $500 against the agreed upon purchase price of the residential real property.

“Residential real property” means real property improved by a one to four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to (a) unimproved real property upon which such dwellings are to be constructed or (b) condominium units or cooperative apartments or (c) property on a homeowners’ association that is not owned in fee simple by the seller.

Instructions to the Seller:
a. Answer all questions based upon your actual knowledge.
b. Attach additional pages with your signature if additional space is required.
c. Complete this form yourself.
d. If some items do not apply to your property, check “NA” (Non-applicable). If you do not know the answer check “Unkn” (Unknown).

Seller’s Statement:.........


This is a State required compliance and every Broker is obligated regardless of whether or not they are a member of the National Association of Realtors.
0 votes Thank Flag Link Sun Feb 24, 2013
This is a rather vague question and there are national standards that only agents who belong to the National Association of Realtors (hence the name REALTOR) have to adhere to. But generally an agent representing a buyer should have that buyer's best interest at heart and tell them all the negative things that could be material to that buyer. As an exclusive buyer's agent, that is what I do every day.
0 votes Thank Flag Link Mon Jan 28, 2013
That is a disclosure that should be made. Failure to do so could be costly down the road.
0 votes Thank Flag Link Sat Jan 26, 2013
if the agent represents the buyer, they should be looking out fior the buyers best interest so yes should disclose anything that affects health or value.
0 votes Thank Flag Link Sat Jan 26, 2013
If an agent is aware of any problem it is his/ her responsibility to disclose this information.
0 votes Thank Flag Link Fri Jan 25, 2013
No question about it. Even if it's not evident in a visual inspection, they have a fiduciary responsibility to their buyer and must disclose it. Failure to do so could result in substantial liability to the buyer's agent.

Don Mituzas
Licensed Associate Broker
Douglas Elliman Real Estate

http://www.nyhomeseller.com
0 votes Thank Flag Link Fri Jan 25, 2013
As the buyer's agent you owe certain fiduciary duties to your client and have to act in his best interest and help him to negotiate the best price. If the flooding problem may affect the price - the buyer's agent not only has to disclose the problem but should also try to negotiate a better price because of flooding issue.

Here are the duties of the buyer's agent to his client stated in New York State Disclosure Form for Buyer and Seller:
"A buyer’s agent has, without limitation, the following fiduciary duties to the buyer: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account."

The seller's agent would also have to disclose a flooding problem under NYS law: "In dealings with the buyer, a seller’s agent should (a) exercise reasonable skill and care in performance of the agent’s duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law." see Statua
0 votes Thank Flag Link Fri Jan 25, 2013
Both legally and ethically they are bound to do so. Ethically a listing agent and the Seller should, and in some cases they may also be legally required to do so. Buyer brokers are required to do what is in the best interest of their clients, they have a fiduciary responsibility to them.
0 votes Thank Flag Link Fri Jan 25, 2013
Yes, Ethically and legally you must disclose. You are representing the buyer which means you have their best interest at heart. Period.
0 votes Thank Flag Link Fri Jan 25, 2013
If I was the buyers agent I would definitely disclose this information to my buyer, I would never put money first in front of someone else's safety. And also if I was the listing agent
0 votes Thank Flag Link Thu Jan 24, 2013
It goes past being unethical. It's actionable by the NYDOS if it can be proved that the agent representing the buyer knowingly failed in his/her fiduciary duties.
0 votes Thank Flag Link Thu Jan 24, 2013
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