Synthetic Stucco Disclosure

Q: I am listing a house that is clad in synthetic stucco. The sellers tell me that they have never had a problem with it, but they have decided to make “No Representations”  about it in question #3 of the N. C. Residential Property and Owners Association Disclosure Statement. Do I still have to disclose the presence of the synthetic stucco to  prospective purchasers?

A: Yes. The presence of a product known as “exterior insulating and finishing system” (EIFS), which is often referred to as “synthetic stucco,” is a material fact. As with all  material facts, real estate licensees have a duty to disclose such information to prospective purchasers, irrespective of whether the seller chooses to make a representation  on the N. C Residential Property and Owners’ Association Disclosure Statement. Note that if a house was previously clad (either in whole or in part) in synthetic stucco, that is also a material fact which real estate licensees must disclose to prospective purchasers. You should discuss disclosure of material facts with your sellers when you secure the listing agreement. Paragraph 9 of the Exclusive Right to Sell Listing Agreement (form 101) provides that: “…Firm is required by law to disclose to potential purchasers of the  Property all material facts pertaining to the Property about which the Firm knows or reasonably should know, and that REALTORS® have an ethical responsibility to treat all  parties to the transaction honestly.” Therefore, although the seller may elect in this instance to make “No Representation” in the Disclosure Statement, a real estate licensee  is not relieved of the duty to disclose material facts simply because the agent’s principal chooses to make “No Representation.” Further, a seller should never direct a listing  agent not to disclose a material fact about which the listing agent knows or reasonably should know, as such a direction would violate the N. C. real estate licensing law and  the REALTOR® Code of Ethics. Absolute fidelity to a client contemplates that a real estate licensee follow only the lawful directions of the client. If the seller is concerned  about civil liability for representations made with respect to synthetic stucco or any other material fact, then the seller should consult a private attorney.