Question

Discuss the issues raised in the following hypothetical situations based on information learned in the textbook. A real estate licensee must treat customers fairly. Customers are entitled to know material information about property that affects its value such as defects in the premises, title problems and boundary encroachments. Clients are entitled to all this information and the licensee's opinion regarding market value, assistance in marketing the home and negotiation strategy. Clients are entitled to loyalty, confidentiality and obedience as well as other duties previously discussed. Agents should not engage in fraud in discharging their duty to clients however. Customers are to be treated fairly but not equally.

     Aron has an appointment to show 83 acres of rural property he listed to a potential buyer. In discussing his appointment with another licensee in his office he learns that the property adjacent to the listed property had a test on their well water six months ago which showed the water unsafe to drink.

1. Does Aron have to reveal the existence of the test to the buyer? Does he have to reveal it to the seller who listed it with him? How should he advise the seller?
2. Aron knows the seller is selling the property to raise money to pay for medical expenses. Should he tell potential buyers about the seller's situation?
3. Aron has the water tested on the listed property and places the written report in a file at his office without telling the seller the results. Can the seller be treated by law as having the information? Why or why not?
4. Victor has been contacted by Max about listing a home. Max says "I need to get this house sold. The city is going to widen this street and when they do there will be a lot more traffic. I need to get it sold now." What should Victor's response be?
5. Lindsey is a licensee showing property to a young couple and she says "This would be a great house for first time home buyers". If the couple buys the house and later become unhappy with their purchase explain whether Lindsey's statement is actionable.

Answer 1

Answer:

1)A real estate licensee should share the material information to the buyer that would affect the deal and decision making of the buyer. Any information that could affect the consideration the buyer would pay should be disclosed by the licensee for taking fair decision by the buyer. Hence Aron should share the information with the buyer post he conducting the test regarding the same. Before sharing the information with the buyer, Aron should share the information with the seller also. Aron should advise him to conduct the test for his property also, so that the price could be negotiated accordingly.

2)The purpose of selling the property could be shared provided the client has given consent for the same. Mere disclosure of the purpose of selling the asset could be shared, however it cannot be used as a selling propagation. The licensee should not try to convince the client as the seller is in deep need of money for his personal needs.

3)No. Mere filing the information will not be adequate and will not imply that the information has been shared with the client. Necessary written communication should have been made to the seller so that he could be fully aware of the situation of the land which he owns.

4)Victor would understand the location of the property and other necessary details required for taking up the assignment. Victor should communicate the policies of the organisation regarding the cooperation that need to be extended by the sellers prior to executing the listing agreement. Details regarding the amount of compensation should also be discussed.

5)Real estate licensee should not make any exaggeration with respect to the property being sold by them. Any exaggeration, misrepresentation would be actionable. However, in the said context, Lindsey mentioning great house will not amount to exaggeration. She would have made that statement considering certain features of the house. However, if the couple is not happy because of their personal reasons, they cannot pull the licensee into the same and put a claim against the licensee.