This is a story of a guy, a senior at the University of Florida, who wanted me to help him cheat on a test. Before we get through this article, I’ll tell you what happened and why, and the lesson learned.
But in the meantime, I want you to know what should happen if you sell residential real estate in Florida, and how your real estate broker will help you. The law requires the Seller to reveal anything he knows about residential property that would have a material effect on the value of the property, and that is not readily visible to a Buyer. If you will remember that rule, and abide by it, you don’t need the rest of this article.
But you do need to know the effect this rule has on your Realtor, and what you should expect from him or her as a result.
In the beginning of time there were Realtors. They were paid by the person who hired them, normally the Seller, and therefore they became the Seller’s agent. The law of agency is long developed at common law, and that law remains viable and demanding, even today. But, real estate agents and the public soon learned that the common law of the agency didn’t fit the “modern” world of real estate. Multiple listing systems created a sub-agency relationship by which a selling agent was employed by a Seller, that agent hired a sub-agent who was called the “Buyer’s agent”, all of whom were paid by the Seller. Legally, all of them owed a duty to the Seller, and yet the Buyers believed they were “represented by” the agent who drove them around town for three weeks while the Buyer looked at property.
No one was comfortable with the fiction that this sub-agent represented the Buyer, when legally he did not. That charade changed by amendments to the statute that created a “transaction broker”. The law now says that that broker must give disclosures of his authority to his client, but his client has become neither Buyer nor Seller but “the deal”, regardless of who pays his commission. In either event, a broker (for this article, I use the term “broker” as I think the public does, meaning either a licensed broker or salesman) has a duty of honesty to his client, and he has a duty to reveal matters he knows that would affect the material value of property, but are not observable to the other side.
This duty provided by statute is important to the public. When you get a Buyer, every broker will give you a form sales contract. That contract will tell you that you have a duty to disclose to the Purchaser facts that you know that would have a material effect on value. You will also receive a Seller’s Disclosure Form on which you will be asked many questions about the house. That form will be given to the Buyer. If you don’t fill out that form accurately, you are inviting a lawsuit. What’s more, the contract you sign with the Purchaser will include a statement that you have told him everything. It will also tell you that if the broker gets sued because you did not disclose to the Purchaser, the broker has a right to be protected by you in that lawsuit.
All of this means that deception is treacherous, and expensive. Your only friend in the jungle is a broker who will document the proper disclosures.
One thing you can’t afford is to be dragged back into a real estate closing you thought was finished months ago, because you knew something you did not disclose.
I started this by telling you I had learned a lesson from my “friend” who came to me asking that I help him cheat on an exam. What he didn’t know was that I had abandoned all thought of being Phi Beta anything, I didn’t need the course, and I had no motive to cheat my way out the door. The lesson I learned was none of that. It was the lesson taught by his absolute desperation to get someone, anyone, to join him in cheating. I saw clearly that it is human nature to need someone to ratify your bad conduct, and it’s easier when your friend does it too.
There is a practical lesson in this story for this article. It is unlikely that a Seller will ever have something major wrong with his house, sell without disclosing to the Purchaser, and there be no evidence of what he did not disclose. Normally someone helped him do it.
Please understand that your Realtor does not want to be in a lawsuit with you. You are far better off to reveal whatever you know to the Purchaser and document the disclosure. Let the Purchaser inspect what you disclosed. Then document the inspection. Then hug the Realtor who made you do it.
Next month we talk about low-area drainage with Roy Petrey, Civil Engineer with Polyengineering, Inc. Roy has consented to consult and co-write an article about the challenges to surface water drainage in South Okaloosa County. The following article will discuss “Zombie Real Estate” the real estate nobody wants becomes a blight on subdivisions and associations because it sits unoccupied or untended.