Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.
When is sold, sold?
Ethics code is clear on disclosure of accepted offers.
April 1, 2006
Q: We recently represented buyers who bought a home contingent on selling their property. Even after the contract was accepted, the listing agent continued to market the home on the MLS.
When an offer is accepted, is the listing agent responsible for changing the status in the MLS to a pending sale, and does failing to do so violate the Code of Ethics?
A: As you suggest, your question raises both an MLS policy issue and a Code of Ethics question. The Code addresses this issue head on. Standard of Practice 3-6 provides that “REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation.” The NAR Professional Standards Committee recently reemphasized the importance of this disclosure by adding the phrase “including offers with unresolved contingencies” to the policy. Clearly, the listing broker in your situation should disclose the existence of your buyers’ accepted offer to any broker seeking cooperation.
Standard of Practice 3-6 doesn’t require that the disclosure be in the MLS, although your MLS rules may. Most MLSs have a rule requiring that the listing agent change the status of a listing when an offer has been accepted, although how soon this change is required varies.
Whether the listing agent in your case violated Standard of Practice 3-6 depends on whether he told any other brokers desiring to show the property that an accepted offer existed. If he did, his action didn’t violate the Code.
Q: Must a routine repair that was made to a home before it was listed be disclosed by the owners or the listing agent?
A: It’s common for sellers to make repairs on their home before listing it, but whether you or the sellers need to disclose those repairs usually depends on how significant the problem was to the property’s condition.
Article 2 of the Code of Ethics requires that “REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.” The difficult issue is deciding whether the information about the property’s condition and the repair would be “pertinent” to a typical buyer.
Appendix II to Part Four of the Code of Ethics and Arbitration Manual contains a detailed explanation of what constitutes a pertinent fact. For example, a matter is pertinent if it’s “any material fact that could affect a reasonable purchaser’s decision to purchase or the price that a purchaser might pay . . ..”
Generally speaking, routine maintenance items such as replacing a leaking faucet or correcting a sticking closet door wouldn’t require disclosure. Painting or even roof replacement might not necessarily require disclosure either.
But what if the sellers made a significant repair to part of the home that either had an ongoing problem or could require continuing repair or replacement in the future? For example, if a basement of a home has been waterproofed and the work carries a lifetime guarantee from the vendor, does that mean that the basement will never leak again? Perhaps, but the buyers would certainly need to know about the guarantee. If a repair has been made to a key structural element of the house, such as a basement, the safest course of action is to disclose the history of the repair and let the buyers decide if the fact is pertinent.
The spirit of the Code favors full disclosure of anything that might affect a reasonable purchaser’s decision to buy.
You should also consult with your attorney on any disclosure laws in your state and exactly what they may require.