Here at the office, we have been discussing the legal and ethical ramifications of the Seller Property Condition Disclosure. While it is common knowledge that a Seller must disclose any known defects of the property, things get blurry when a defect is discovered during the home inspection process. Here's what we know.
If the Seller or the Seller's agent is given a copy of the inspection report, any discovered defect needs to be disclosed on the Seller Property Disclosure. If the Seller and Seller's Agent have listed the property "as is" and have requested that no information from the Inspection Report be shared with them, technically, they will not be liable for any defects unknown to them.
Many times, Buyers, who have paid for the inspection, do not give a copy of the report to the Sellers because they feel that the report is their property and was conducted for their information only. And, in most cases, that is their prerogative. The problem comes when a major defect has been discovered like a cracked heat exchanger on the furnace or a serious problem with the foundation. If the Buyer's agent and the Buyer keep those items to themselves and simply walk away from the transaction without alerting the Seller or the Seller's agent of the known dangers, then who can be held liable if someone is harmed by the defects?
Since Realtors are responsible to represent only their client in the real estate transaction, according to the Real Estate Commission, a Buyer's agent may not be bound to disclose knowledge about the Seller's home. Since the Buyer is not the responsible party for the safety of the home, they may not be bound to disclose the defects either. But, this is where the letter of the law must be considered through the eyes of ethics. If the Buyer or the Buyer's agent has knowledge of defects in a home that may be a threat to the health and safety of those who inhabit the property, they certainly should feel a responsibility to let the Seller and/or the Seller's agent know, even if there is a request to the contrary. The Buyer's agent should have this notice in writing to document their disclosure since in the event that someone is harmed, they could be held responsible. Once the Sellers are made aware, they will either need to fix the issue or change the property disclosure to reflect the discovery. Even if the law does not specifically address the chain of disclosure after a home inspection, civil law might. Anyone with prior knowledge of a serious defect may be held accountable for the damage caused by the defect.
So, in summary, while we are not attorneys and certainly cannot give legal advice, because we conduct ourselves and our business by the "Golden Rule," being sure to treat those around us as we would want to be treated, it is our opinion that whenever a material defect is discovered that may be considered a hazard to the health and safety of the inhabitants, it is the responsibility of those who know to tell those who don't. Until next time...