October 30, 2010 (Jeff Alan)
A California appellate court confirmed this week that real estate practitioners have the same responsibility as sellers to disclose information they have that affects the “value and desirability of the property.”
In a homebuyers’ suit against the seller’s brokers, the would-be buyers claimed that the brokers were under an obligation to disclose to the buyers that the property was over-encumbered and could not in fact be sold to them at the agreed upon purchase price.
The seller and the listing associate failed to tell the potential homebuyers about three mortgages against the property totaling $1.141 million. The sellers accepted a buyer’s offer of $749,000, but the deal fell apart because the sellers couldn’t deliver clear title.
In the case Holmes vs. Summers, the would-be buyers sued the real estate firm and the court found that the real estate practitioner had a greater duty to disclose facts affecting the desirability and marketability of the property than he did to protect the privacy of the seller.
Real estate analysts believe that this decision will make it incumbent on real estate practitioners with short-sale listings to provide specific information about circumstances surrounding the sales, including approvals required for the sales to close.