Do buyer agents have a duty to disclose material facts in an inspection report?
QUESTION: A representative of the Real Estate Commission gave a recent presentation at our office on the subject of material facts. He asserted that when a buyer orders an inspection report, the buyer’s agent has a duty not only to review that report but also to disclose any material defects or issues described in that report to the listing agent. Do buyer agents really have that obligation?
ANSWER: They do.
While all REALTORS® hopefully understand the duty of listing agents to discover and disclose material facts to buyers and their agents, some agents don’t realize that the obligation goes both ways.
In the written materials for the 2022-2023 General Update Course (available on the Commission’s website), the Commission addressed the question: “What information should a broker disclose from a home inspection report?” They wrote that brokers must disclose any defect or issue regarding the property that is identified in the report. The Commission then posed this question: “What if a broker represents a buyer-client?” Their answer was as follows: “If a broker represents a buyer-client and discovers upon review of their home inspection report that a material fact exists, the broker must inform all parties to the transaction and this includes the listing agent and/or seller, if they are unrepresented.”
It is important to recognize that the disclosure obligation of buyer agents runs only to the parties involved in the transaction. What that means is that if the buyer agent’s client elects to terminate their contract, the buyer agent does not have an obligation to disclose any material facts to parties represented by other agents who may later become interested in purchasing the subject property. At that point, the buyer agent will likely not know whether the seller has, in the interim, addressed any of the material issues. Buyer agents considering disclosing such information to parties they do not represent should therefore understand that sellers may consider such disclosure to be a wrongful interference with the seller’s efforts to sell their property.
Release Date: 10/3/2024
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