Residential Property Condition Disclosure Report (PDR) - outlines any flaws or issues that home sellers (and their real estate agents) are aware of, which could negatively affect the property’s value.  Purchase agreement must identify that the buyer has or has not received the (PDR).

​

Fraud - An intentional mis-statement of facts.

​

Silent Fraud (Non-Disclosure) - The act of withholding information regarding concealed property defects from the buyer while the seller knows if such information is disclosed, it may result in losing the sale or offering a lower price.

Example: Seller paves over an old, leaky underground storage tank because he does not want a potential buyer to find out about it.

​

Latent Defect - A defect that is hidden but known to the seller only and cannot be revealed by an ordinary inspection of the agent or buyer, such as a crack in a basement wall that is concealed behind some drywall or paneling. A “non-disclosure” of a defect will result in seller committing “silent fraud”.

​

Patent Defect - A defect that can be discovered as a result of a reasonable inspection that is conducted on the property, such as an obvious roof leak, furnace problem, etc.

​

Licensee's role regarding Property Conditions

If a licensee is aware of certain property defects, they have a duty to disclose the information to the buyer even if licensee was a seller‘s agent.

Licensee must encourage the seller to disclose all known defects even if the defect is not addressed in the seller‘s disclosure statement.

​

Material Facts - Have direct effect on value such as a leak in the roof, pollution, a bad furnace, etc. It may not be a defect but an issue that a buyer must know such as the fact that the seller has made an addition to the property without a permit or has an ongoing legal problem with a neighbor or the association. Material facts must be disclosed to the buyer. 

​

Non-Material Facts - Have no effect on value such as the reason for the sale, seller is sick, getting a divorce, seller lost job and is desperate for money, or, for example, that a murder or suicide has occurred in the house. No duty is imposed to disclose. 

 

Lead Paint Disclosure - This requires that potential buyers and renters of housing built prior to 1978 receive certain information about lead and lead hazards in the residence prior to becoming obligated to buy or rent, and provides the opportunity for an independent lead inspection for buyers. Sellers, landlords, and agents are responsible for compliance.

​

Property Disclosure - Sellers has duty to discover and disclose any known latent defects that threaten personal safety or structural soundness.

 

Comprehensive Environmental Response Compensation and Liability Act (CERCLA)/Superfund Amendment and Reauthorization Act (SARA) - authorizes the President to respond to releases or threatened releases of hazardous substances into the environment. CERCLA authorities complement those of the Resource Conservation and Recovery Act, which primarily regulates ongoing hazardous waste handling and disposal.

 

Retroactive liability - liability for actions before CERCLA was passed. For example, in the Love Canal case all the waste was dumped long before CERCLA was passed in 1980, but the release of that waste was current and causing injury after the statute was enacted.

​

Environmental Disclosures - 

Brokers should be familiar with environmental hazards known to be common to their market area.

The listing broker and selling broker, if a subagent, must inform the seller or lessor of their obligations for environmental disclosures under the Residential Lead-Based Paint Hazard Reduction Act of 1992 for dwellings built prior to 1978.

Homebuyers must be alerted to any lead-based paint or related hazards.

Homebuyers must be given an agreed-upon time period for the opportunity to conduct a lead-based paint inspection or risk assessment at their expense.

A Certification and Acknowledgment of Disclosures must be attached to the offer to purchase.  

A copy of the Certification and Acknowledgment must be kept by the seller and both agents for three years after closing or the beginning of the lease.

​

Material Facts for Seller's Agent -

disclosure of all offers,

buyer’s ability to offer a higher price (in most states),

disclosing names of prospective buyers as well as any relationship, such as buyer being related to licensee, and

disclosure of known material defects in property.

 

Material Facts for Buyer's Agent -

disclosing property deficiencies,

disclosing provisions of offer to purchase that are not favorable to the buyer,

recommending the lowest price the buyer should offer regardless of the list price, &

disclosing how long the property has been listed

​

Required Disclosures -

• whether the house has various appliances (refrigerator, dishwasher, air conditioning and/or heating system, security system, hot tub, garbage disposal, and so on) and if so, what condition they are in

• roofing material and condition

• history of pest activity

• water intrusion or related foundation or grading issues

• neighborhood issues such as noise or pollution

• local environmental hazards, and whether the property has been stigmatized in the public eye by dramatic circumstances such as a murder or other violent crime, hauntings or supernatural phenomena, suicide, or other serious criminal activity (more than a mere burglary).