“What Did the Seller Know, and When Did They Know It?”
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
At least in Minnesota, Realtors have an independent duty to disclose any material home defects that they’re aware of.
So, does that mean home Buyers can rely on listing agents (representing Sellers) to catch and reveal potential Seller fraud?
No, for three reasons.
One. The listing agent may not know about the problem(s).
While agents have to use reasonable care, they don’t have an affirmative duty to inspect their client’s home, looking for issues.
The same Seller who’s willing to withhold material info about their home from prospective Buyers likely feels no compunction about misleading their agent, too.
Two. If the agent threatens to independently disclose the issue(s), the Seller can fire them and hire another agent.
Another agent who — surprise, surprise — isn’t especially curious about what caused the previous listing to go south.
Yes, listing agents have homeowners sign a binding contract, which is valid for a prescribed term (4-6 months is typical).
But, an ethical agent isn’t likely to protest when a client determined to commit fraud wants out of their contract.
In fact, they’ll beat them to it.
Three. If — when — the owner is presented with incontrovertible evidence** that their Seller Disclosure is inaccurate (most commonly by the Buyer’s home inspector), they can loudly proclaim that “they positively had no idea” (of course).
Step #2: simply ditch the Seller Disclosure altogether, and opt to sell “As Is.”
Seller Denial
Is going down this path going to help the Seller’s bottom line?
I’d argue the opposite — never mind the risk of being sued for fraud.
As I tell my Buyer clients, when it comes to deceitful Sellers (thankfully, a rarity in Minnesota): 1) “there’s never just one cockroach”; and 2) once you get a whiff of dishonesty . . . run, do not walk away.
**Fraudulent Sellers’ response to such proof (at least initially)?
That it’s “just one contractor’s (ill-informed) opinion.”
See also, “Wet Basements: Who’s Responsible?”; and “The Value of a Contractor ‘Deep Throat.‘”
