|
REAL ETHICS by Steve Stazel | January
2005 | Index of all Real Ethics columns
REALTORS® should disclose all material defects
What is a material defect?
The best answer to this I am aware of comes from the Code of Ethics and Arbitration Manual published by the National Association of REALTORS®. It states: "Any material fact that could affect a reasonable purchaser's decision to purchase, or the price that a purchaser might pay, should be disclosed."
The Code further states: "The question that Ethics panels should consider in determining whether a REALTOR® has concealed a pertinent fact is whether disclosure of the fact in question could have had an effect on a reasonable purchaser's decision."
We disclose for two reasons:
- First, a purchaser has the right to know exactly what he or she is buying. If you were buying a car and the seller knew of hidden defects, wouldn't you want to know about them before you bought the car?
- Second, by disclosing, you protect two very important people...the seller and yourself. If there is a defect in the house that is important enough to cause a buyer not to buy the house and you don't disclose it, would it make sense that once the buyer does find out about that defect that it is important enough that the buyer would sue you and the seller?
Here is the interesting thing about this situation: What if the buyer has moved out of state? Who is the only convenient person (who has errors and omission insurance) still in Colorado for the buyer to sue? Now instead of paying half of the damages, you get to pay them all. Probably the worst thing in this situation for you is the time, effort and energy you will be required to expend defending the lawsuit. You will have to spend time with the defense attorneys, maybe going to court, and losing time from your real estate practice. It's just not worth it.
Each month, the Aurora Association of REALTORSŪ Web site features Real Ethics,
a column by Steve Stazel devoted to explaining Code of
Ethics issues for members. A REALTORŪ since 1974, Stazel is a Professional Standards
instructor and senior Ethics
instructor for the Colorado Association of REALTORSŪ.
If you have an ethical concern or an issue you would like
to see addressed, please call Stazel at (303) 773-3333 or e-mail him at
stazels@msn.com. The comments of this article reflect the understanding and
opinions of the author and do not represent an official expression of policy by the National Association
of REALTORSŪ.
|
