The law minces no words.
When it comes to letting buyers know about a defect in a property that can materially affect its value, it is impossible for sellers to err in disclosing what they know.
And when it comes to working with a broker, the broker may not fail to disclose his or her relationship to buyer or seller. Nor may brokers hide any material defects of which they are aware.
With respect to sellers, they need to appreciate that defending themselves in court will far exceed the amount of money they think, probably erroneously, they will lose by disclosing any defects. If you have to ask, I advise sellers, the answer always is apparent: Yes, disclose.
Demonstrating honesty may even lubricate a negotiation and sale. Moreover, sellers can take pride in knowing that they’ve taken the high road.
As for brokers, they are held to tough standards. For example, under state law, they must make clear for which party they are acting. For dwellings with four or fewer units, that disclosure must be in writing. (I think it’s insane that apartments in larger buildings are exempt.)
Furthermore, even when brokers represent the seller, the law demands that they deal with buyers honestly, fairly and in good faith. Considering the loose talk at open houses and in other meetings, it’s a fair question how frequently the law is honored in the breach–for example, discussing square footage or renovation costs.
Moreover, it is worth repeating that brokers are required to disclose material defects whispered to them or discovered independently .
Should a broker end up representing both buyer and seller – formally, dual agency – both parties must consent to the relationship in writing.
A listing broker has no obligation to enter into a dual agency relationship. Instead, a broker may accept an offer without providing advice to the buyer such as a winning amount or other strategic initiative – in other words, facilitating the transaction without acting as the buyer’s representative.
The precept I learned at the outset of my career is this: When in doubt, disclose. I have followed that advice ever since and am glad that is the case, even as many others seem to skirt the law.
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022