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REAL ETHICS by Steve Stazel | July 2008 | Index of all Real Ethics columns
What defects should we disclose?
The best answer to this question comes from the Code of Ethics and Arbitration Manual published by the National Association of REALTORS®. It states that “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 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.”
There are two reasons why we disclose. First, doesn’t a purchaser have the right to know the condition of what they are buying? If you were buying a car and the seller knew of hidden defects, would you want to know about them before you agreed on a price?
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 do not disclose it, would it make sense that once the buyer does find out about that defect he or she might find it important enough to sue you and the seller?
Here is the interesting thing about this situation. What if the seller moves out of state? Who would be the only person (who has errors and omission insurance) still in Colorado for the buyer to sue?
Now instead of potentially paying half of the damages, you would get to pay them all. Probably the worst thing in this situation for you would be the time, effort and energy required to help defend the errors and omissions insurer. You would 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 Outlook features RealEthics, a column by Steve Stazel devoted to explaining Code of Ethics issues for members. The comments stated in this article are those of the author and do not necessarily represent the views of the National Association of REALTORS®, the Colorado Association of REALTORS® or the Aurora Association of REALTORS®. Ultimately, a hearing panel of the Professional Standards Committee determines whether a violation of the Code of Ethics has occurred on a case-by-case basis. These comments should not serve as the foundation of any ethics complaint, arbitration request or response.
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.
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