2019 Sep 12th

Should Hoboken Buyers Care About the Truth?

There is a common latin phrase all law students learn at the beginning of their first year contract classes –  Caveat Emptor.  It means “buyer beware”.  When something is sold, it is up to the buyer to figure out if there is anything wrong with the item.  Consumer protection law has come a long way since those days.  Today, one of the most frequent lawsuits against both real estate agents and sellers concern misrepresentation of material facts.  Yet it is not something that is discussed much in the day-to-day of our business.

What’s a material fact?  Basically it is something that had you, the buyer, known about it your decision to purchase or the price you would be willing to pay would change.  Material facts include things like whether renovations were done with necessary permits; whether the roof leaks and when the roof was last replaced; whether the property has ever flooded, the presence of lead paint, mold, asbestos; the square footage; the age of the heating/cooling system .  You get the idea.  In many places, realtors have the seller fill out a disclosure document so that the buyer knows what he or she is buying, the agent and brokerage are protected from these sort of suits.

The NYTimes recently published an interesting article about people in New York being fined for doing work without permits.  I often come across properties in Hoboken that have been renovated.  Sellers will say to me “oh, we didn’t need permits to redo the bathroom because we just changed the tile and the toilet and the vanity.  Well, that is not quite correct.  Hoboken is pretty strict about requiring permits for renovations. Doing renovations without a permit is almost always a material fact.  During attorney review, a competent attorney for the buyer will ask the seller to overtly represent that any work done was done with appropriate permits.  Lying about whether your reno was done with permits is a material fact.

Recently, I had a seller engage me to list her property for sale.  Our Code of Ethics pretty clearly states:  “REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.” When we were ready to put the condo on the MLS, it became clear that this seller was asking me to misrepresent a whole bunch of facts.  There were some pretty significant items that she wanted me not to mention and others she flat-out wanted me to lie about.  I said no thanks – find yourself another realtor.  I don’t need the business badly enough to risk my livelihood so I just gave up the listing.  I was not willing to risk losing my license, being faced with an ethics violation and a potential lawsuit from a disgruntled buyer so that she could sell her condo for a higher price than it was really worth.  It is not the way I conduct my business.  She kept arguing with me that she wasn’t reeeaalllllyyy asking me to lie.  Well, asking me to saying the sky is red when it is really blue is asking me to lie.  I can’t wait to see who they hire to list this place.

Why it is not common practice in our market to have every single seller fill out a property disclosure form is beyond my comprehension.  It protects all the parties from legal claims and lets the buyer know exactly what they are getting.  Can sellers still lie?  Of course they can, but now it’s on the seller.  But at least the agent is likely to be protected.

 

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