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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®



  SALES MEETING TOOL KIT: PROPERTY DISCLOSURE
 

Component 1: Facilitator Talking Points

Component 2: Property Disclosure Agenda

Component 3: Handout 1, What Is Liability

Component 4: Activity 1, Recognizing Improper Disclosure

Component 5: Activity 1, Explanations for Disclosure Scenarios

Component 6: Handout 2, Tips for Reducing Your Risks

Component 7. Handout 3, Disclosure Primer and Your Company’s Property Disclosure Form

Component 8: Activity 2, Identifying Defect Red Flags

Component 9: Activity 2, Answers to Red Flags

Component 10: Activity 3: Lead Out Quiz

Component 11: Activity 3, Answers to Lead Quiz

Component 12: Handout 4, A summary of your state’s disclosure requirements under Megan’s Law

Other Resources 		  Component 1: Facilitator Talking Points

These notes will guide you and your salespeople through an overview of property disclosure using activities and discussion. Disclosure is a complex topic and may warrant several training session to cover in depth.

Before the Meeting:

· Review all the meeting documents in this kit.
· Know your state’s and your company’s policy on property disclosure.
· Know your state’s and community’s laws on disclosure under Megan’s Law.

Print the following:

1. These facilitator notes—Component 1

2. The Property Disclosure Agenda—Component 2

3. Handout 1: What Is Liability—Component 3

4. Activity 1: Recognizing Improper Disclosure—Component 4

5. Activity 1: Explanations for Disclosure Scenarios—Component 5

6. Handout 2: Tips for Reducing Your Risks—Component 6

7. Handout 3: Disclosure Primer and Your Company’s Property Disclosure Form—Component 7

8. Activity 2: Identifying Defect Red Flags—Component 8

9. Activity 2: Answers to Red Flags—Component 9

10. Activity 3: Lead Out Quiz—Component 10

11. Activity 3: Answers to Lead Quiz—Component 11

12. Handout 4: A summary of your state’s disclosure requirements under Megan’s Law—Component 12

Welcome (1 minute)

True stories(2 min.)
1. Relate a personal story (with names changed if necessary) about a salesperson who was charged with misrepresentation.
2. Ask the group about whether any of them have been sued or threatened with suit by a past client. Ask if they would be comfortable sharing their experiences.

To segue from the true stories to the discussion, tell participants that according to the most recent NATIONAL ASSOCIATION OF REALTORS® “Legal Environment Scan,” 21.9 percent of all reported cases against real estate professionals centered on the failure to properly disclose property information.

Background and goals(2 min.)
According to a recent study by the NATIONAL ASSOCIATION OF REALTORS® , nearly 70 percent of all claims against professionals resulted from charges of some form of misrepresentation, negligence, or fraud. Even if charges are later dropped or the suit is decided in your favor, your losses are tremendous—in lost time, in lost reputation, and in attorney’s fees. I wish I could say that after this meeting, you’ll never have to worry about being sued; but we all know that mistakes can happen and that clients can overreact. But what I can promises is that if you learn and follow correct property disclosure procedures, your chances of facing legal action will be significantly reduced.

In this meeting, we will:
  • Show how to recognize actions that create liability and how to avoid them.
  • Explain the property disclosure form required in your state, or if no required form exists, explain the company’s property disclosure form and how and when it should be completed.
  • List some common property defects and learn how to identify them.
  • Review the federal regulations on lead-based paint disclosure.
  • Review federal and state regulations on disclosure under Megan’s Law.

Handout 1: What Is Liability?(5 min.)
Read the definitions of fraud and misrepresentation in Handout 1. After reading each definition, ask a participant to describe a situation that creates this type of violation.

Activity 1: Liability Scenarios(10 min.)
Read each of the three scenarios. Ask participants what disclosure violations occurred and what the salesperson in each story could have done differently. Use the explanations provided (Component 5) to guide the discussion.

Handout 2: Reducing Your Risk(5 min.)
Review actions that salespeople can take to avoid the most common causes of liability. Reach each risk reduction tip and then ask one participant to give an example of how this would apply in a specific real estate transaction.

Handout 3: Along with this disclosure primer, provide copies of your company’s property disclosure form or the form mandated by law in your state. (5 min.)
Ask participants to share how they introduce and explain the form to sellers. Emphasis the need for salespeople to explain the legal reasons for full disclosure to sellers. Remind participants of your procedure for keeping signed disclosure forms.

Facilitator Note: If you don't have time for the entire agenda, this point provides a logical break to divide the meeting into two parts.

Activity 2: Identifying Those Defect Red Flags(5 min.)
After receiving a property disclosure statement, salespeople should make a visual inspection of the property and look for red flags that might indicate a problem. Ask participants to describe an indicator that the building component listed on the left side of sheet used in Activity 2 might have a defect or require repair. Write each item on a flip chart and have participants write the indicators in the blank space next to each component to keep as a reference. After completing the list, ask participants if they can add components and indicators to the list. Some other defects to mention include: faulty electrical systems, HVAC problems, and radon.

Activity 3: Get the Lead Out Quiz(5 min.)
Let participants complete the short, basic quiz on disclosure requirements relating to homes that may have lead-based paint. Ask a participant for the right answer to each question, prompting yourself with the Lead Answer Sheet (Component 11). Emphasize that lead paint disclosure is an important responsibility of all real estate practitioners and that they should have a thorough understanding of the law.

Handout 4: Megan’s Law Disclosure(3 min.)
Obtain a summary copy of your state’s requirements, if any, for notifying buyers about convicted sex offenders that live in a neighborhood. If your state does not have specific guidelines, review the suggested disclosure procedure on Handout 4.

Adjourn.
Thank participants for their time.

Component 2, next page >

Note: This information provides general legal information and should not be relied upon as legal guidance. Before acting, both the relevant laws and legal counsel should be consulted. This information should not be construed as specific legal advice nor as an opinion on particular facts, cases, or situations.