RISK MANAGEMENT

Question: What disclosure responsibility does a Realtor® have beyond the "four corners of the property?

Answer: This requires an answer from a number of considerations and sources

STATE LICENSING AGENCY/REAL ESTATE BOARD (REB) RULES & REGULATIONS:

Disclosure to Client
A licensee acting as a standard agent must disclose in a timely manner to the licensee's client all material facts related to the property or concerning the transaction." Which means disclosure "beyond the four corners of the property" to clients is required.

Disclosure to Customer
A licensee representing a seller or landlord as a standard agent must disclose in a timely manner to a prospective purchaser or tenant all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee." Which means no disclosure "beyond the four corners of the property" is required.

CODE OF VIRGINIA:
Disclosure to Client
A licensee shall disclose to his/her client material facts related to the property or concerning the transaction of which the licensee has actual knowledge. Which means disclosure "beyond the four corners of the property" is required.

Disclosure to Customer
A licensee engaged by a seller shall disclose to prospective buyers/tenants (customers) all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee. Which means no disclosure "beyond the four corners of the property" is required.

There is no requirement for disclosure as referenced in the Code of Virginia by a licensee representing a buyer/tenant to a seller/landlord (customer) other than the requirement to "...treat all prospective sellers/landlords honestly and shall not knowingly give them false information..."

CODE OF ETHICS:
Disclosure to Client and Customer
Article 2 or the Code of Ethics requires "Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency duties owed to their clients."

This means disclosure of pertinent facts relating to the property and the transaction must be disclosed by a Realtor® to his client, but because state regulations and the Code of Virginia only disclosure of pertinent facts relating to the property may be disclosed by a Realtor® to a customer.