ften when it comes to real estate law, many clients ask us, “why is full disclosure important?” In business transactions, especially real estate deals, the contract often contains a full disclosure requirement. Full disclosure means being truthful and forthcoming about anything the other party should know regarding any material issues involving the transaction, especially if it may mean the difference between the other party entering or not entering the deal.
Even if the contract does not contain a full disclosure requirement, most states require that real estate brokers and agents to sign a full disclosure form listing everything material about the deal, under the penalty of perjury. This means that if a real estate agent or broker falsifies or fails to disclose important information, he or she could be charged with perjury. Additionally, the form might contain other penalties agreed upon between the parties if one party fails to disclosure material information.
In real estate transactions, full disclosure typically means that the seller must disclose any property defects and any other important information that could have an effect on a party’s decision to enter into the deal; however, many transactions are mediated by a real estate broker or his or her agent. The real estate broker and the agent have the same duty as the seller to make a full disclosure. If the real estate agent is representing a buyer in a property transaction, he or she has a duty to disclose information such as:
- Whether the seller is willing to accept a lower offer.
- Facts or data describing the urgency of the seller’s need to complete the sale.
- Whether the broker has any interest in the property being sold or any personal relationship to the seller.
- Figures and estimates of the value of the property.
- How long the property has been on the market.
- Updates on any current offers and counteroffers that have been placed on the property.
- Any other important information that would allow the buyer to finalize the sale at the lowest price and at terms that are most favorable to the buyer
Real estate brokers and their agents are responsible for ensuring that their client enters into a transaction fully informed. Whether they are representing the buyer or seller, both parties should know all the facts relating to the sale or purchase of the property. If your real estate broker or agent has violated his or her full disclosure requirements, you may be entitled to contract damages. For example, a seller may be able to recover any projected profits that were lost due to the broker’s failure to disclose pertinent information. This is usually calculated according to fair market values and the rates that are applied to the particular neighborhood where the property is located. Additionally, if your broker violated his duty to fully disclose because of malicious or criminal intent, it may be possible to recover other types of damages, such as punitive damages.
If you suspect that you have incurred losses or lost opportunities due to your real estate agent’s actions, you should keep all records and documents relating to your dealings with the agent. Be sure to gather important data such as any prices that were presented to you, dates of offers, acceptances of offers, and any written reports that have suspicious or questionable figures. When working with a real estate broker or agent, you should double check the information that they provide to you. You may wish to hire a property appraiser for a second opinion, or speak with a real estate lawyer regarding your rights as a buyer or as a seller. One of our real estate attorneys at Woodall Batchelor PLLC can help protect your interests by confirming that all information has been properly disclosed to you. Also, if you need a draft of a full disclosure agreement, our attorneys can create one that is specific to your circumstances.