Real property law is complex and burdensome. However, those of us engaged in the practice have narrowed it down to three keys. Where every realtor knows the three keys to real estate – location, location, location; every real estate attorney subscribes to the three keys to real property law – disclose, disclose, disclose.

Disclosure is the cornerstone in meeting the fiduciary duty. Essentially, the law requires that realtors go “above and beyond” in order to help their lay clients consider all factors before making the single biggest purchase of their lives. This does not mean the realtor is making the decision for the client. Rather, the realtor is making the client aware of facts so that the client can make his/her own decision. This often creates a conundrum for realtors. We need to get the facts to our clients, but we must also make sure that the client is not swayed by the way we characterize and present those facts.

Description is not always good

The issue is, how descriptive should our formal disclosures be? Some may argue that a diligent realtor should try to precisely describe every single fact so as to meet his/her duty. Although well intentioned, those who strive to be overly descriptive usually face increased liability down the road.

For example, if a well to do realtor discloses “4 little cracks 6 inches above the fireplace,” he/she may have accidentally misled the buyer. What happens if a lawyer decides those “little cracks” are not so little? What if there are actually 7 cracks, and they are situated 2 feet above the fireplace? Has the well to do realtor properly disclosed the material fact? The answer is probably “no.”

The truth is that description usually equates to nothing more than a personal opinion. At the moment that we let our opinions sway the buyer into a transaction, we have breached our duty as realtors. Consider the last example. What if the realtor simply wrote, “There are cracks above the fireplace”? Now the client has the facts, the disclosure is made, and there is no argument that the realtor has swayed the layperson into a bad transaction.  It no longer matters how many cracks there are, or how big or small they are, or where exactly they can be found. The realtor has done his/her job, and the buyer can investigate and make an informed decision on his/her own.

Never Under Disclose

Of course, I’m not advising that we under disclose. Again, the key to real property law is to disclose, disclose, disclose. Where overly describing each disclosed fact is foolish, qualifying or limiting your disclosures is just plain wrong. For example, disclosing that the “Nearby train tracks are used regularly during rush hour” may be considered disingenuous by a court because the disclosure has been qualified. The agent is essentially saying, “Trains only use this track once or twice a day, at around 8:30am or 5:30pm.” At the moment a train passes by in the afternoon, or late in the evening, the disclosure is no longer accurate. Why not simply say, “Nearby train tracks are used regularly.” Basically, when we qualify our disclosures we bear the risk if the limitation is not accurate.

Remember that a Recommendation is not a Disclosure

Some realtors decide that there is no right way to disclose everything. So, they give a blanket recommendation instead. For example, it is not uncommon for a realtor to write the words “get inspected” or “needs repair” in the disclosure forms if the property has too many problems to list. By rule, a valid disclosure is a “statement of the physical condition of a property and those structures situated on the property.” If a layperson buys a home, and then brings suit alleging a failure to disclose, the realtor cannot defend himself/herself by saying, “I recommended an inspection.” The court will rule that the realtor had a duty to disclose the facts, and that the realtor breached that duty by trying to find someone else to disclose the facts.

In closing, disclosure is the most important part of our job. It is an art that must be perfected by real estate professionals over time. However, one foul up can devastate your career. So, remember that your job is to point out facts. Do not be overly descriptive because your perception is not what’s important. Let your client determine what is big, small, good, bad, black, white, and etc. Do not qualify your disclosures. If something happens twice a day, simply say that it happens. If you limit your disclosure to “twice a day,” then you lose when the client returns a year later with evidence that it sometimes happens 3 times a day. And never give a recommendation in lieu of a disclosure. Your job is to disclose – so do your job. Disclosures are never easy, but doing them the right way is the easiest way to stay out of a lawsuit.