REALTOR® Magazine Online: Other Forms of Disclosure

YOUR INTERACTIVE MAGAZINE

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Risk management
Agency Disclosure

Three Lines of Defense Against Risk

Keeping Risks Under Control

Controlling Transaction Risks

Agency Disclosure

Avoiding Antitrust Risks

Minimizing Liability from Contracts

Fair Housing Risks

Controlling Personnel Risks

Communications Policies to Minimize Risks

Insuring Against Risks

More Resources: Controlling Business Risks

Code of Ethics: Controlling Business Risks

Other Forms of Disclosure

In addition to agency disclosure, a broker is responsible for several types of disclosure. Failure to make these disclosures, or failure to use required forms and procedures, could expose the broker and the company to liability.

Licensee's interest. When licensees buy or sell property in which they have or expect to have an interest, that interest much be disclosed to prospective buyers or sellers.

Commission rebates. The legality of commission rebates and referral fees paid to affinity partners vary from state to state. In some states, rebates are legal but may require disclosure.

Commission rebates. The legality of commission rebates and referral fees paid to affinity partners vary from state to state. In some states, rebates are legal but may require disclosure.

Property condition. About two-thirds of all lawsuits against real estate professionals allege misrepresentation or failure to disclose property defects . In addition to disclosing structural defects and modifications, easements, flooding, soil problems, and compliance with building codes, most states also require sellers to disclose the presence of hazardous substances , such as lead, radon, and asbestos. Many brokers are wisely increasing their use of seller property condition disclosure forms to shift responsibility for full disclosure to the property owner.

TIP: Train your salespeople on proper property disclosure with the Prepackaged Sales Meetings.

Financing. Federal laws include the 1969 Truth-in-Lending Act, which requires that the borrower on owner-occupied residential property be informed of all finance charges, including the true annual interest rate. The Real Estate Settlement Procedures Act of 1974 assures that buyers and sellers of residential real estate receive complete information about the sources and disposition of the funds involved in the transaction at settlement. Although the burden of compliance with RESPA rests with lenders and settlement agents, brokers whose services include closings and settlements need to be sure that proper procedures are followed.

Portions adapted from Reduce Your Risks to Professional Liability Claims in Real Estate, Leland M. Kraft, Jr., Apollo Publications, 1991

Avoiding Antitrust Risks >

Keep It Ethical
While agents are not obligated to discover latent defects on a property, they must avoid misrepresentation or concealment of pertinent facts relating to the property. (Article 2 )

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