Can the Seller's Realtor Be Held Accountable for Lack of Disclosure?

Disclosures

Mandated disclosure laws typically pertain to issues that are not easily seen, but would possibly dissuade a buyer, had he known about the situation. Examples of issues that should be disclosed include serious recent plumbing issues, foundation flaws or problems with property easements. Other serious, but silent issues also must be disclosed. A roof that leaks during rainy season, must be disclosed as buyers may not get the chance to be inside the house to witness the roof leak before buying the house.

A commonly held misconception is that if a violent crime, such as a suicide or murder, took place in the home, it must be disclosed to potential buyers. Thirty states have laws, according to Bankrate, stating real estate agents and sellers are not under any obligation to disclose such events. Other states leave it up to the discretion of the seller and realtor to decide. California requires the disclosure of a death on the property if the death occurred within the 3 years prior to the sale.

Real estate agents in some states are required to disclose all state-mandated disclosure issues -- if they are aware of their existence. For example, the seller informs the agent the roof leaks in the rainy season, but the seller asks the real estate agent to keep the information to himself. Some states mandate that the agent make full disclosure to the buyer's agent and the buyer before the closing date. The failure of a realtor to disclose mandated issues, in states where realtors must disclose, can leave the agent financially responsible for any damages resulting from the problem. Damages are typically limited to repairing the problem. Many states, including Tennessee, have disclosure forms that are completed at the time of sale. The forms list issues that are being disclosed. Parties from both sides of the deal sign their acknowledgement of the disclosed items.

There are two instances in which a real estate agent cannot be held responsible for failure to disclose. Problems that were clearly visible when the buyer toured the house are not the realtor's problem. For example, a large, wide crack on the living room ceiling that was obvious during the open house should have been noticed by the buyer. In addition, conditions the realtor could not see and were not told about by the seller are not the agent's financial responsibility. Agents are not expected to know a roof leaks when it rains if they are only in the house on sunny days. In such cases, the seller may be financially liable for problem, but the real estate agent is not.