February 26th, 2024 at 4:08 pm
A. Do not disclose under the listing agent’s fiduciary duty to the seller.
B. Disclose to the buyer anyway, because the listing agent has an independent duty to disclose.
C. Convince the seller to disclose.
D. Terminate the agency relationship with the seller.
Answer: Answer A and B are wrong. As a listing agent, your seller’s refusal to disclose material facts places you between that proverbial rock and hard place. If you don’t disclose, you may be held liable to the buyer for nondisclosure. You have an independent duty to disclose as set forth in the “Seller’s Agent” section in the Agency Disclosure Statement (AD). But if you do disclose, you may be held liable for breaching your fiduciary duty to your seller who gave you clear instructions not to disclose.
Answer C is the best answer. By convincing the seller to disclose, you will avoid both the potential liability to the buyer for nondisclosure, as well as the potential liability to the seller for breach of fiduciary duty. That may be easier said than done. In next week’s Legal Tip, I’ll go over some pointers to help you convince your sellers to disclose.
Answer D is not the best answer, because it may not be enough depending on the circumstances. If a seller refuses to disclose, and you cannot convince the seller otherwise, you may be able to avoid liability by terminating your agency relationship with the seller before a buyer enters the picture. But terminating your agency relationship with the seller may not be a viable solution after a buyer is already in contract with the seller. The reason is the buyer can still try to hold you liable by claiming that you should have disclosed before you terminated your agency relationship.
Stay Tuned: Please stay tuned next week for some helpful tips for convincing sellers to disclose known material facts.
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