Quite often real estate licensees violate Florida Standards of Practice for real estate practitioners. These actions can lead to civil lawsuits where both buyers and sellers can suffer significant losses. Chapter 475, Florida Statutes, regulates the real estate industry and is the primary law upon which court decisions are made on monetary damages. Courts also look to prior case law decisions and the testimony of expert witnesses. That is where you may need assistance from a qualified expert witness. Jason Steele is a licensed real estate broker with the expertise to assist in such matters (see link below).
One of the most common violations by real estate licensees deals with the ruling in Johnson vs. Davis concerning defects in the purchased residential property. Many courts have interpreted and refined the application of this rule of law. From these cases one can conclude that in a home buyer’s nondisclosure claim against the seller, there are four elements: (1) the seller must have knowledge of a defect in the property; (2) the defect must materially affect the value of the property; (3) the defect must not be readily observable and must be unknown to the buyer; and (4) the buyer must establish that the seller failed to disclose the defect to the buyer.
The key to this legal trend has been to establish that a seller has a duty to disclose known defects. The standard makes this an affirmative obligation to disclose – not just if asked but in any instance where known defects exist. Failure to disclose could result in legal action against the seller. In essence, this turns the tide and makes the duty one of “seller beware” or perhaps “seller disclose.” Where does disclosure begin? Who is responsible for disclosure? What is the agent’s responsibility? Anyone buying a house faces hidden unknowns. The seller is responsible for disclosing those defects if they materially affect the value. There are many types of defects, including Chinese drywall, mold, lawsuits, sinking slabs, unpermitted electrical, plumbing, etc. The best thing for a real estate agent to do is advise the seller to disclose the material defects that are known, and go one step further by getting a certified building contractor to do an in-depth inspection of their home and provide it to the realtor before the property is listed. This report should not be relied on by the realtor or buyer. It should be viewed as just an opinion of conditions. The realtor’s buyer should always get their own report (this report is not required by law and is used as a precaution).
There is an old saying that I used as a former Florida Realtor GRI instructor: “When in danger, when in doubt, write it out, write it out.” Meticulous record-keeping is a must for any real estate agent. Agents have the responsibility to disclose any defects that are known to them. Most real estate agents deliver a material defect disclosure form that the sellers fill out and sign, which become part of the licensee’s records. I have testified in Johnson vs. Davis lawsuits. They can be extremely expensive for the seller, the real estate agent, and the buyer if defects are not disclosed. I have also testified in civil cases involving issues of undisclosed defects. I recently was retained as an expert witness in a major million dollar plus lawsuit that settled prior to trial. This case involved real estate agents as the sellers, and their son and daughter (also agents), who listed the property. The facts of that case present a good example of what not to do as a real estate agent. It all boils down to following the requirements of Chapter 475, Florida Statutes, and the rules of the Agency, including:
1. Dealing honestly and fairly.
2. Accounting for all funds.
3. Using skill, care, and diligence in the transaction.
4. Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the BUYER.
5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing.
6. Limited confidentiality, unless waived in writing by a party, will prevent disclosure that the SELLER will accept a price less than the asking or listed price; that the BUYER will pay a price greater than the price submitted in a written offer; the motivation of any party for selling or buying the property; that a SELLER or BUYER will agree to financing terms other than those offered; or any other information requested by party to remain confidential.
7. Any additional duties that are entered into by the original agreement or by separate written agreement.
8. Limited representation means that a BUYER or SELLER is not responsible for the acts of the licensee. Additionally, parties are giving up their rights to the undivided loyalty of the licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the BUYER and the SELLER, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.
For more information on expert witness arrangements please contact me at firstname.lastname@example.org.