A Real Estate Agent listed a lot for sale. The Sellers completed a Sales Disclosure Form and checked “No” to the following: “Have there been or are there any hazardous conditions on the property, such as methane, gas, lead paint, radon gas in house or well, radioactive material, landfill, mineshaft, expansive soil, toxic materials, mold or other biological contaminants, asbestos insulation or PCBs?” “Are there moisture and/or water problems in the basement, crawl space area, or any other area?” The Sellers testified that this was the first time completing this form and that they asked their agent how to complete the form. The Sellers testified that their agent told them that they should complete the form based on the condition of the Property as of the exact moment that they completed and signed the form. The Sellers claim that their answers were correct based upon their current knowledge of the property and the improvements thereon. The Sellers testified that they understood the phrase “or any other area” to pertain to the home, not their yard.

Shortly before the transaction at issue, another potential buyer backed out of a Purchase Agreement because he observed flooding at the Property after a significant rain event. The Sellers’ Agent was aware of the reason that buyer requested a Mutual Release. The flooding of the Property receded before the transaction at issue. After the Buyers closed on the property, they alleged they experienced significant flooding and septic problems, and the Sellers were aware of these problems before listing the Property for sale. Specifically, “moderate” rain pools in the yard. The Buyers further allege the Sellers’ Agent was also aware of the flooding and septic problems at the Property but intentionally withheld that information, advised the Sellers how to respond on the Real Estate Sale Disclosure Form and delivered the form to the Buyers.

MISTAKE

It doesn’t help when there are Facebook posts from the Sellers showing the past vast flooding, saying they live on a “lake”, nor text messages discussing this with their own agent. Of course, a listing agent should never give legal advice to a seller about how to fill out a Sales Disclosure Form, but when an agent has actual knowledge of a defect, it must be disclosed.

RESULT

Buyers sued the Sellers and the Sellers’ Agent for failure to disclose information about prior flooding and septic problems at the Property. Sellers’ Agents allege the Seller disclosed information pertaining to the Property regarding the condition on the specific date they filled out the Sales Disclosure Form. The problem here is that the Sellers’ Agent was told about the past flooding and did not disclose it.

PREVENTION

Be transparent. If an agent is told something, or has actual knowledge, it must be disclosed. The key: Disclose, Disclose and Disclose…