This column has treated the topics of ethics and agency in past issues. A companion subject is the requirement of disclosure. This not only has to do with moral principles of integrity, honesty and fairness, but also meeting legal duties. There are disclosure requirements of agency relationships and the establishment of working business guidelines between principals and agents. These procedures outline the duties and obligations professionals have with consumers.
Another very important disclosure that calls for due diligence has to do with the disclosure of property conditions which a seller or owner must give in order for a buyer to be informed relative to a property being considered. The standard form agreement was developed and is copyrighted by the Utah Association of REALTORS®. This is a standard property condition disclosure form designed for use by sellers who list their property for sale. It provides the seller an opportunity to disclose to potential buyers, seller's knowledge of the condition of the property.
The heading of the Property Condition Disclosure Form provides an important notice: "NOTICE FROM COMPANY
Buyer and Seller are advised that the Company and its agents are trained in the marketing of real estate. Neither the Company nor its agents are trained or licensed to provide Buyer or Seller with professional advice regarding the physical condition of any property or regarding legal or tax matters. The Company and its agents strongly recommend that in connection with any offer to acquire the Property, Buyer retain the professional services of legal and/or tax advisors, property inspectors, surveyors, and other professionals to satisfy Buyer as to any and all aspects of the physical and legal condition of the Property. BUYER IS ADVISED NOT TO RELY ON THE COMPANY, OR ON ANY AGENTS
OF THE COMPANY, FOR A DETERMINATION REGARDING THE PHYSICAL OR LEGAL CONDITION OF THE PROPERTY, including, but not limited to, legal uses of the Property, the condition of any appliances, heating/cooling equipment and systems, plumbing and electrical fixtures and equipment, moisture or other problems in the roof or foundation, sewer problems, the availability and location of utilities, the exact square footage or acreage of the Property, or the location of property lines."
Then the form provides "INSTRUCTIONS TO SELLER
SELLER IS OBLIGATED UNDER LAW TO DISCLOSE TO BUYERS DEFECTS IN THE PROPERTY AND FACTS KNOWN TO SELLER THAT MATERIALLY AND ADVERSELY AFFECT THE USE AND VALUE OF THE PROPERTY THAT CANNOT BE DISCOVERED BY A REASONABLE INSPECTION BY AN ORDINARY PRUDENT BUYER. This disclosure form is designed to assist Seller in complying with these disclosure requirements. Please thoroughly disclose your actual knowledge regarding the condition of the Property. The Company, other real estate agents, and buyers will rely on this disclosure form."
Following these introductory instructions, the five page form then provides 23 different sections wherein various components are itemized that call for check off application and/or comments from the owner of the owner's knowledge of the condition or status of those elements. It is important that Sellers give full and complete explanation of known defects or repairs that have been made.
Sellers are well advised to tell the real story about the property. Some sellers may have a thought that telling of a specific condition may deter a buyer from making an offer or that it may kill a deal. But it is far better for sellers to tell and explain than to neglect or avoid the identification and explanation of an item, only to have it be discovered after closing and then be faced with legal consequences.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated. He Specializes in Residential, Investment and Commercial Real Estate, holding National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), Resort and Second Home Property Specialist (RSPS), Seniors Real Estate Specialist (SRES), Certified International Property Specialist (CIPS), GREEN Property Specialist, and Certified Short Sale and Foreclosure Resource Specialist (SFR). You can contact him by e-mail at Jim@JimColeman4Homes.com. Call: (435) 627-5411; or write: Jim Coleman, 201 East St. George Boulevard, St. George, Utah 84770. This and other columns are available at www.WinningTalk.com/articles.