Disclosure issue questions are the biggest risk management question in real estate.

A judge or hearing panel is going to look at the total situation’s facts, so the answer can vary but a simple answer that can change with certain facts is "disclose known material adverse facts in a reasonable time period and prior to offer/contract is ideal" depending on the circumstances.

The SC RPCDS Residential Property Condition Disclosure Statement (aka seller’s disclosure) from LLR is a REALTORS®’s best risk management strategy to a post-closing lawsuit over the property condition.

Always try and get a RPCDS in the transaction…even land and even commercial.

Here is why: The RPCDS creation statute says that a real estate licensee cannot be successfully sued unless the real estate licensee had actual knowledge of a seller’s false statement on the RPCDS. This statute was upheld by the SC Court of Appeals and so is the precedent for all SC trial courts.

The RPCDS is disclosed prior to offer/contract. The RPCDS is often uploaded into MLS and copies are often either sent to buyer side or sitting at the listing so the information is available to buyer side while searching for properties.

Other states with commercial or land disclosure forms ask questions which are contained within the RPCDS.


SCR hotline is hearing about more buyers who purchase without visiting/inspecting the property so risks go up with even obvious defects/issues when buyers and buyer reps are not visiting and looking at the property prior to contract and closing.

Final walkthroughs on the day of closing can help spot issues. Discovering and remedying issues prior to closing can help manage risks even if that means the parties agreeing to delay closing.

SCR311 due diligence addendum use is another way to manage risks. Buyers might desire to "walk away" from extensive repairs/issues for example.

REALTORS® can also limit risks by recommending that buyers obtain every inspection under the sun and let the buyer choose their inspections based on the buyer’s desires and money. Common important inspections that don’t occur regularly in residential deals but should be recommended for risk management reasons: surveys, insurance (e.g. flood, homeowners), structural engineering, air quality, offsite issues, school district issues, remodeling/additions permitting/construction issues, air quality, water quality, plumbing system issues, electrical systems issues, outbuilding/pool issues.

2017 license law update sought to clarify case law on material facts (any fact that influences a consumer’s decision making).

(16) ‘Material adverse fact’ means:

(a) a condition or occurrence that is generally recognized as:

(i) significantly and adversely affecting the value of the real estate;

(ii) significantly reducing the structural integrity of improvements to real estate; or

(iii) presenting a significant health risk to occupants of the real estate; or

(b) information that indicates that a party to a transaction is not able to or does not intend to meet an obligation under a contract or agreement made concerning the transaction.

(iii) disclosing to the seller all material adverse facts concerning the transaction which are actually known to the seller’s agent except as directed otherwise in this section;

(iii) disclosing to the buyer all material adverse facts concerning the transaction which are actually known to the licensee except as directed otherwise in this section. Nothing in this chapter may limit a buyer’s obligation to inspect the physical condition of the property which the buyer may purchase;

(d) disclosing material adverse facts that affect the transaction, or the value or condition of the real property and that are not readily ascertainable;

NAR Code of Ethics Article 2 covers disclosure and states that REALTORS® are not qualified as inspectors and do not have a duty to inspect, discover latent (non-obvious) defects, advise on matters outside their license for sales/marketing, or disclose confidential information under state law.



Posted by: Byron King on 05/23/19 (This information is only accurate as of 05/23/19. You must contact SCR for updates and changes to this information after 05/23/19 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)