Profile picture for The LaPeer Team

What would you do?

If you had a client who had his house up for sale and through a buyer's inspection, discovered that there were multiple problems with the house. You facilitated the work on the home b/c you were told that the listing would be yours until the end of the year, but for whatever reason, the seller listed with another less experienced agent. Now the house is back on the mls and the listing says that there are no known defects when it should read that known defects repaired. Furthermore, sellers are supposed to give any buyer an inspection report (structural, pest, mold, etc) if it was in the last four years. This bad one was less than 6 months ago. And, according to TX state law, mold even if remediated is supposed to be disclosed and the certification that it no longer had mold must be given to a buyer for the next five years. So... would you call the new listing agent or her broker who probably would just think you are being vindictive, or do you just call the state? And what would you be legally responsible for? the information? the inspection report? Is this an ethical problem or a legal one. Just curious what others have to say.

  • October 24 2012 - US
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Answers (21)

Profile picture for The LaPeer Team
I would like to think that a buyer's agent would have the best interest of their client in mind, but unfortunately, that isn't always the case and they don't do their research. Or they may be too new to thoroughly research a property. In any case, at this point, it's about as good as it gets. I sent the listing agent the inspections and when he did nothing about it for about a week, I turned it over to the local board. Now the listing agent just refers to the Sellers Disclosure which does not disclose all of the inspections. It is a shame what some agents will do to "protect" their clients and sell a home.
  • November 09 2012
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Profile picture for Adamsami
Cindy, by chance does the history of the listing in your mls reflect anything regarding condition issues or property disclosure reports? If yes the buyers agent would very likely have run across it while researching details for the buyer.
  • November 08 2012
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Profile picture for Connie Klemme

good thoughts to you Definitely!!  Please post again if there is additional activity on this- it's a great learning example for anyone that might be faced with similar issues in the future.  I hadn't thought of risk to you for informing (other than social risk) but as Mike says we have seen many examples were a person can sue for anything (thinking of story where a person that broke into a business, was cut by the glass were they illegal entered, and sued for medical expenses and won).

sounds like you're going about it the best way possible! 

  • October 29 2012
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Profile picture for user942595
I would have recommended to send a registered letter directly to the house owner, cc'ing the current agent/broker, warning non-disclosure of repairs was not optional and in violation of state law, perhaps even citing the specific reference. This way you could only be seen as a caring professional (which you are) looking out for the interests of a former client. Emailing the broker, however, may now be seen as vindictiveness or at least that you are a buttinski. I doubt real estate professionals can be sanctioned for breaking confidentiality, or even if that can be taken for granted, but bad-mouthing by this owner and/or the current agent can damage your reputation. While your former client may attempt to sue you, I doubt he'd be successful. If you can prove defamation should he go in that direction, you'd win.

In any event, I believe I can safely say your reputation is safely 5 stars with seventeen other posters and me on this Q & A board.

Caveat: I'm neither a lawyer nor a real estate professional.
  • October 27 2012
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Profile picture for sunnyview
Good thoughts to you Cindy.
  • October 27 2012
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Profile picture for The LaPeer Team
Emailed the agent and her broker all of the inspection reports. We will see what happens next.
  • October 27 2012
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Profile picture for sunnyview
"You're a good person, wish there were more like you and I'd recommend you to anyone."

Big time ditto for me on that Miss Cindy. It is really hard to deal with situation like this, but you are a good agent and person from everything I have ever seen. I know that it may be naive, but I believe that if you are willing to stand up for good that good things will come your way. There are ways to report anonymously to some agencies if you ask. Some assign you a number for your report and you can provide the basic information for review, others use other systems to take complaints. 

You can always go through the back door and mail a didacted or blacked out report to the new owner without a name or return address. At that point, they can decide what to do with it and your hands and heart are clean without significant professional risk if done carefully.
  • October 27 2012
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Profile picture for Dunes ..


Kudos to you Cindy...you're one of the special few who deserve respect
IMO most people would do nothing but complain about the situation/wrong but do nothing about it

You're a good person, wish there were more like you and I'd recommend you to anyone

  • October 27 2012
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I missed the whole angle about YOU being liable should you disclose to the agent what you know about the property. That's a sticky situation.

Years ago I knew of someone who did the right thing and exposed what turned out to be a shady operation. While he was right he was out 30k in legal fees. Sometimes it's very expensive to be right.
  • October 26 2012
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Profile picture for The LaPeer Team
Dunes - please don't misunderstand my motivation at all. I will willingly admit that I was/am bitter about losing the listing after the seller used me to get what he wanted. And of course I am concerned about how/if it would impact me financially. It wouldn't be fair to my family if I didn't at least take a minute and think about that. That's one of the reasons I needed to speak w/an attorney. My question was two part - am I legally responsible for this information and if I "out" the seller, what impact could it have on me/my family/my business. People can sue, and often win, for the dumbest of things, so I wanted to make sure I made my next decision with my eyes wide open. While legally I am not required to do anything, morally and ethically it is the right thing to tell the other agent and send her the inspection report. It doesn't matter if she knows right now or not. What matters is that she will be informed from that time on and will have to disclose this. I will go to the state board if she doesn't handle it correctly after that. However, I will give her the benefit of the doubt and inform her prior to going that far.

Sometimes a person needs to hear that they are not crazy for thinking and acting the way they do. So, thank you all for your input.
  • October 26 2012
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Profile picture for Connie Klemme
too bad we can only like a post one time.
I'd give that response more than one thumbs up for this line

Who's fault will it be if something negative/bad happens to the Buyer of this
property/their family/children?
  • October 26 2012
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Profile picture for Dunes ..
Think ya know what you should do, the right thing to do..think it's the concern about the possible consequences resulting from doing the right thing that's the real issue
Will this bother other Agents/Brokers..will doing the right thing impact me Professionally/Financially in a negative way?

My question would be..Morally..not Legally required/Not Realtor Code of Ethics but Morally as a Human Being

If nothing is said/done..
Who's fault will it be if something negative/bad happens to the Buyer of this property/their family/children?
Who will be/should be on the list of people who did not do the Right Thing morally as a Human Being?

Sometimes it's just about what's Right and what's Wrong..sometimes it's just as simple as that and the rest is just yadda yadda imo
  • October 26 2012
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Profile picture for Connie Klemme

I hope your attorney says there is a responsibilty as well.

Thinking about it from all directions- to me it's fairly simple that there is a duty to inform the new agent. 
If the agent really doesn't know- then they not only need to know to protect themselves but also to learn that they should be more attentive to the history of their new listings and recognize red flags.    If the agent does know, they need to be informed so that perhaps they will get refocused on ethics (or be weeded out). 

gosh just from a perspective of self preservation, I can imagine Joe & Jane Buyer coming along, buying the house, discovering an issue in a few months that was potentially hidden/missed etc.  and when they file a suit they include you after their research suggests that you should know and knew it was listed but didn't act. 

I wouldn't worry about how someone feels about doing the right thing.  Integrity is not always fun - that's why it holds so much value.  Best of luck.

  • October 26 2012
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Profile picture for hpvanc
I hope you find out from your attorney that you have a clear legal responsibility. 

You definitely have an ethical responsibility, that is not going to be welcomed by the seller, and if the listing agent and/or their broker are either in the know or merely the "see no evil, hear no evil," types will not be welcomed by them either.
  • October 26 2012
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Profile picture for blank screen EXILED
By the way, if you really believe the new agent and the agent's broker are aware of a condition they are not disclosing, why not file a complaint against the agent with the local board, and let the board review it?
  • October 25 2012
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Profile picture for blank screen EXILED
At least with termites in this State, all inspection reports and all completion reports are filed with the State, so it is almost impossible to cover up known conditions and mitigation that was done.

Sure, mold of some types and water damage and dry-rot  is also noted by the termite inspectors, but that doesn't cover all molds nor all mold mitigation.  For many molds and spores, owners just take their own samples and send them to a test lab, and then take appropriate mitigation steps for problematic areas, such as correcting water issues, cutting out damaged drywall & replacing, etc.  Most are warned against disturbing spores that could spread and get in ones lungs, thus the necessity for proper protection.

Some just cover with "Kills" paint.  That may be a "red-flag" for a home inspector; but depending on the location, it still could be easily overlooked.  If the water issue wasn't addressed, the mold is likely coming back regardless.

I really have no clue how an attorney could help you.  It is not their issue either.  If anything, both the buyer and seller should be suing the seller's new agent and broker.
  • October 25 2012
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Profile picture for The LaPeer Team
Unfortunately,, I am the broker! I'm calling an attorney tomorrow. I believe the agent knows because it was not hidden at all when we had the listing. I've seen agents do this in the past with termites, but this is a much bigger issue. Without a doubt, if I contact the agent or her broker, they will just write it off as a bitter agent. So, it is just so much easier to call an attorney.
  • October 25 2012
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Profile picture for SteadyState
What is troubling about this episode is:

a) The buyer of the property is not receiving complete information and there does not appear to be a cure
b) I cannot believe that the new listing agent does NOT know about the history of the property.

It's sad that cannibalism exists at all but this story confirms the myth.
  • October 25 2012
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Profile picture for blank screen EXILED
As a potential buyer, what I think is the "right thing to do" and what I would desire to be done is different than what NAR "code of ethics" states and different than what state licensing laws require.

Obviously, if you know something that is not being revealed, I want it disclosed publicly somehow.  But reporting it to the State when the new agent has no clue about the "cover-up"?  It won't be effective as the agent is only required to disclose what they know.  And the home owner/seller is only required to disclose what they know to the best of their ability and to fill out the forms as directed by their agent.

Sending a note to the new agent's broker about known conditions might be a reasonable thing; but you are no longer the agent for the client, thus it is technically not your responsibility.  And may be considered meddling, or even an attempt to take someone elses client.

You would hope that any inspector hired would turn up these recent mitigation issues...  but it is not all that clear that an average inspector would pick up on all such potential issues.

I'm sorry to hear that your prior client had major mold issues that had to be mitigated.  Perhaps you are now fortunate that it is no longer your problem.  Still, I understand your concern for both your prior client, and any potential new buyer, especially if the disclosures are not made properly.

I heard on the radio about 2 months ago about a family that bought an REO that had previously been used as a meth-lab, and since it cannot be fully and properly mitigated with some remaining risk, the present owner is now stuck with a property that can't be used that they cannot sell.  Even if they walk away and their lender forecloses and it is sold as an REO again... any new owner would again be stuck with the same issue, and would believe that they were taken advantage of, due to a condition that obviously someone knew about.  This could eventually lead to lawsuits, but it is highly unlikely that the lender that did the REO would be found liable... but a prior owner could be.  But they don't have any money to cover such loses.  Nor would most insurance companies cover such losses.
  • October 25 2012
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Profile picture for Jay_Thompson
What would I do? Honestly, I'd call my broker. That's what you pay them for -- dealing with potentially ugly situations.

(And I'm speaking as a licensed broker here, not as a Zillow employee.)

It's a great question, but almost impossible to answer. I don't know much about Texas real estate law and what I do know about Arizona law does you no good. I'm not a lawyer, so I can't begin to tell you what you are (or aren't) legally responsible for.

I think it's both a legal and an ethical problem. The fact you took the time to ask shows you that there is something ethical going on. And due to local agency laws (among other laws maybe) then yeah, it's a legal problem too. 

Hence the original answer -- call your broker.

And best of luck if you're actually in this situation. Ugh.
  • October 24 2012
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"for whatever reason, the seller listed with another less experienced agent."

Is it possible that the sellers allegedly relisted with another agent so that they could avoid disclosing the former defects and skirt the state law?

My presumption has to always be that the sellers (purposely or otherwise) have not informed the agent of homes past history. But if the agent is informed of the previous defects (and the need to disclose them) they should be compelled to disclose that information to potential buyers or cancel the listing.

While not an attorney, I can't imagine how you would be legally entangled as you no longer have a contract with the sellers. And the burden of disclosure (in most states) starts with the sellers and becomes the agents responsibility once they are aware of the defects.
  • October 24 2012
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