Don’t conceal.

The laws and ethics do not favor concealing property defects from future purchasers.

The seller agrees by signing the SCR residential listing agreement to disclose (e.g. seller disclosure, RPCDS).  A seller breach of the listing agreement (non disclosure) allows brokerage to sue the seller for full commission and brokerage’s attorney fees.

Your ethics and license law will require you to disclose even if the seller does not disclose and tries to direct you illegally and unethically to conceal your knowledge of the property defect from from future purchasers.

Ethics Article 1 and 12 can apply.

  • Standard of Practice 1-9
    The obligation of Realtors® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law. Realtors® shall not knowingly, during or following the termination of professional relationships with their clients:

1)     reveal confidential information of clients; or

2)     use confidential information of clients to the disadvantage of clients; or

3)     use confidential information of clients for the Realtor®’s advantage or the advantage of third parties unless:

  1. a)   clients consent after full disclosure; or
  2. b)   Realtors® are required by court order; or
  3. c)   it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or
  4. d)   it is necessary to defend a Realtor® or the Realtor®’s employees or associates against an accusation of wrongful conduct.

Information concerning latent material defects is not considered confidential information under this Code of Ethics. (Adopted 1/93, Amended 1/01)

License law:

(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 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;

(G)(1)    A licensee shall treat all parties honestly and may not knowingly give them false or misleading information about the condition of the property which is known to the licensee. A licensee is not obligated to discover latent defects or to advise parties on matters outside the scope of the licensee’s real estate expertise. Notwithstanding another provision of law, no cause of action may be brought against a licensee who has truthfully disclosed to a buyer a known material defect.

(2)    Licensees operating as transaction brokers are required to disclose to buyers and sellers their role and duties in offering customer services to the consumer that shall include the following:

(a)    honesty and fair dealing;

(b)    accounting for all funds;

(c)    using skill, care and diligence in the transaction;

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

(e)    promptly presenting all written offers and counteroffers;

(f)    limited confidentiality, unless waived in writing by a party. This limited confidentiality prohibits disclosing:

(i)        information concerning a buyer’s motivation to buy or the buyer’s willingness to make a higher offer than the price submitted in a written offer;

(ii)    factors motivating a seller to sell or the seller’s willingness to accept an offer less than the list price;

(iii)    that a seller or buyer will agree to financing terms other than those offered; and

(iv)    information requested by a party to remain confidential, except information required by law to be disclosed;

(g)    additional duties that are entered into by separate agreement.

(3)    Prospective buyers and sellers who do not choose to establish an agency relationship with a real estate brokerage firm but who use the services of the firm are considered customers. A licensee may offer the following services to a customer as a single agent or as a transaction broker including, but not limited to:

(a)    identifying and showing property for sale, lease, or exchange;

(b)    providing real estate statistics and information on property;

(c)    providing preprinted real estate forms, contracts, leases, and related exhibits and addenda;

(d)    acting as a scribe in the preparation of real estate forms, contracts, leases, and related exhibits and addenda;

(e)    providing a list of architects, engineers, surveyors, inspectors, lenders, insurance agents, attorneys, and other professionals; and

(f)    identifying schools, shopping facilities, places of worship, and other similar facilities on behalf of the parties in a real estate transaction.

(4)    A licensee offering services to a customer shall:

(a)    timely present all written offers to and from the parties involving the sale, lease, and exchange of property, even when the property is subject to a contract of sale;

(b)    timely account for all money and property received by the broker on behalf of a party in a real estate transaction;

(c)    provide a meaningful explanation of brokerage relationships in real estate transactions;

(d)    provide an explanation of the scope of services to be provided by the licensee;

(e)    be fair and honest and provide accurate information in all dealings;

(f)    keep information confidential as requested in writing by the customer; and

(g)    disclose known material facts regarding the property or the transaction.

(20)    fails to disclose in accordance with Section 40-57-530 a known material fact concerning a real estate transaction;

(f)    preserve confidential information provided by the seller during the course of and following the agency relationship that might have a negative impact on the seller’s real estate activity unless:

(i)        the seller to whom the confidential information pertains grants written consent to disclose the information;

(ii)    disclosure is required by law; or

(iii)    disclosure is necessary to defend the licensee against an accusation of wrongful conduct; or

(iv)    the information becomes public from a source other than the broker.

(2)    No cause of action may arise against a licensee for disclosing confidential information in compliance with item (1)(f).