This is the second article in a series entitled, "Top 10 Claims Against Realtors®". The #2 cause of claims against a Realtor®? Failure to Disclose.

Property value is affected by many physical and nonphysical factors. What matters to one buyer may not matter to another: noisy neighbors, train tracks or a proposed commercial development nearby.

A disgruntled buyer may sue a licensee who remains silent on these issues. In these cases, silence is not golden. If silence is meant to induce someone to enter into a transaction, the liability is the same as for affirmative misrepresentation.

Twelve percent of all claims against REALTORS® involve failure to disclose. The following conditions always require disclosure:

• Those affecting the desirability or value of the property;
• Those you know or should know will likely affect the buyer's decision to purchase; and
• Those which will cause the buyer injury or monetary loss.

Some Interesting Nondisclosure Claims:

• Barking dog problem;
• Death took place in the home;
• Odor in the house;
• Previous fire in the house;
• Presence of sink hole;
• High voltage electric power line on property;

Claim Example: The buyer of a farm sued for failure to discover and disclose gasoline contamination resulting from an underground tank. The broker had merely told the buyer the property was suitable for business, residential recreation and family purposes. The court held that the broker's statement was a misrepresentation.

Different states have differing laws about the disclosure of deaths, murders or other violent crimes at a property. If your state mandates disclosure, this type of information must be disclosed, so this is an area where your knowledge of and adherence of your state's applicable law is imperative. With regard to properties where individuals with AIDS have lived, HUD advises that no disclosure be made - - even if a buyer asks
directly about such information.

Reprinted with permission from Letter of the Law, National Association of REALTORS®