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What they don't know might kill them!

By LaShawn Norden

Real Estate Agent with Keller Williams Heritage Realty

June 02, 2008 09:34 AM

I've been wrestling with a particular issue and am not sure how to best handle it...

The scenario goes like this:

I wrote an offer on a house in a very popular neighborhood about two weeks ago. The house was gorgeous and I was happy for the Buyers when the offer we wrote "won" over two others that had been submitted. The offer was very strong (although not at full price), and contingent upon inspections to the sole satisfaction of the Buyer and the property appraising for at or above the contract price.

Honestly, I thought this was a done deal. The house was impeccably maintained and "looked" like it was in great shape.

Oops, notice I said "looked."

As the saying "looks can be deceiving" goes, this was a perfect definition.

The inspection revealed that the builder had failed to seal the block before putting on the decorative rock face and the sprinkler heads had been hitting the front of the house and seeping through the rock into the drywall...which had a 99% wet reading on the moisture meter.

Fortunately, the Seller was home and the listing agent was present, so the inspector asked for permission to remove the baseboard to see if there was mold.

Ouch, there was black mold that one could see with the naked eye.

Fortunately, the Seller authorized the inspector to take a swab test and sent it to the lab....And, you guessed it...the test came back as toxic black mold.

Needless to say, the Buyers I was working with withdrew from the contract last Tuesday. Problem solved, right?

Today, I noticed that another agent within my office now has Buyer under contract for the very same home. My dilemma is, do I mention the previous inspection to him so that he is aware that there was water intrusion and active mold found or do I not?

The home inspection was paid for by my Buyer, whom I have an Exclusive Buyers Agency Agreement with, but the mold test was paid for by the Seller. I only know that the test was positive because I got a call from the inspection firm whom the Buyer hired.

You'd think the Seller WOULD have updated their disclosures and the Buyer SHOULD have their own inspections, but what happens if they don't? Black toxic mold can be deadly and I'm very concerned for the health of everyone involved...

In addition, I am concerned that my Broker is carrying unnecessary risk by me not saying anything...but would I be at risk of being sued by the Seller for potentially jeopardizing their sale because I shared this information?

Help!! What these new Buyers might not know could kill them and I don't want that on my conscious!

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Kim Harris

Sound Realty - Kirkland, WA

Designated Broker/Owner/Sound Realty

The listing agent needs to disclose this, not you. And since the listing agent was present at the inspection they cannot hide this problem. One thing you could do is have your buyer fax or e-mail the inspection report to the seller for their records and disclosure in order to rectify. If one inspection finds this, chances are pretty good another inspector will run into the same thing. Always a good idea to talk to your broker when something like this occurs. Let the broker pass on the info to others in your office.

Jun 02, 2008 09:45 AM

Chuck Christensen

Your Financial Coach - Bellingham, WA

I would tell him. The selling agent should have informed him anyway. The sellers now know about the problem and would need to redisclose it. If the work had been fixed, it should be reinspected, and the selling agent should have a copy and be aware of it. Why wait till it goes to closing and gets mentioned.....deal killer.

Jun 02, 2008 09:48 AM

Dennis Swartz

Full Circle Property Management - Columbus, OH

MBA, GRI...experience counts!

You don't work for the seller so there is no disclosure problem for you. Latent defects need to be disclosed by the seller and listing agent, and you should let them know that they need to disclose or you will do it for them. If your broker represents the new buyer, your broker should have also represented your buyer, and your broker should have knowledge and disclose. Let your broker disclose and you are off the hook.

Jun 02, 2008 09:52 AM

Joseph D. Federico

MVP Realty - Naples, FL

Southwest Florida Homes with Joe Federico

LaShawn,

I agree with Kim and Dennis, let the listing agent disclose it. In Massachusetts we have to have both sellers and buyers sigb a mold disclosure.

-Joe

Jun 02, 2008 09:59 AM

Charles Buell

Charles Buell Inspections Inc. - Seattle, WA

Seattle Home Inspector

As an inspector I have no clue, but am very interested in seeing agent's responses to this. I know that "technically" my reports belong to only me and my buyer----once my buyer starts sharing the information it seems like it is kind of like "public" information at some point. Wish some attorneys could weigh in on this.

Jun 02, 2008 10:01 AM

Ralph & Susan Alvarez

REMAX Benchmark - Las Vegas, NV

Real Estate Agent Las Vegas NV

I always have my buyer pay for the inspection. Who ever pays for it owns it and can do with it what they will. The sellers should update the SRPD or they could be sued. I have seen the listing agent get nailed for not making sure the SRPD is update. I ran into this situation once and the seller/agent didn't want to return the earnest money. A call Broker to Broker got the money returned after 6 weeks. The home sold but I always wondered if they ever disclosed the problem.

There is nothing wrong with you telling your broker and let him inform the other agent in your office. May be they should use the same inspector to go back out and see what was done.

Ralph

Jun 02, 2008 10:49 AM

Gary McNinch

Better Properties Real Estate - Renton, WA

Broker, Renton WA Real Estate

LaShawn,

Listing agent should have the Seller update the Disclosure. I would definitely tell the Broker the whole story. Broker needs to notify the other agent to protect the client.

List and Sell (and ALWAYS inspect) Gary @ RentonHomeFinder.com

Jun 02, 2008 01:19 PM

Anonymous

Laura

Well business aside what about doing the right thing? Let your agent friend know off the record, then the ball is in their court. No longer in yours and you get to sleep at night!

Jun 03, 2008 08:16 AM

Mary Strang

Viroqua, WI

I think you need to notify your broker and stay out of the middle of this. In our contracts if you break an offer over an adverse fact you must provide a copy of the inspection and the seller then must disclose this to all others even when or after the problem is fixed.

Jun 03, 2008 10:55 AM

Debbie Summers

Charles Rutenberg Realty - New Smyrna Beach, FL

LaShawn - This situation is very delicate. I'm not sure what duty you have to inform the "new" buyer's agent, but it also brings in the brokerage's liability. The sell should have to update their disclosures. Certainly they realize that they are entertaining a new offer from a REALTOR in your office and should "do the right thing". I'm curious to see how this plays out.

Jun 04, 2008 01:10 PM

LaShawn Norden

Keller Williams Heritage Realty - Longwood, FL

REALTOR, (321) 377-0157, Your Real Estate Advocate in Central FL

All-In response to your many comments, thank you!

I have discussed the situation with my Broker, who in turn, has discussed it with the other REALTOR in my office who has Buyers under contract for the same house my Buyers were under contract for when we found out there was mold due to water intrusion. Thankfully, the listing agent informed the new Buyer's Agent of the mold findings and now the Buyers are fully aware of the situation...which of course, is all that I was wishing for!

The Sellers have agreed to the repairs and the Buyers have requested a re-inspection after the mold remediation has been completed.

Now, I can sleep at night knowing everyone has been fully informed and the broker has limited liability!

Thanks again for your comments!

Jun 05, 2008 01:12 AM

Stacey Champion

Champion Indoor Environmental Services, LLC/Champion Indoors, LLC - Phoenix, AZ

If you ever find yourself in the same situation again someday (though hopefully that won't be the case :)) I would advise you to disclose everything to your broker IN WRITING, and keep a copy for your file - for at least 5 years.

I have personally been involved in 2 projects now where there was a similar situation where all of the Realtors "in the know" were sued - and lost.

Some lessons also bring us straight back to kindergarten - treat others as you want them to treat you!

Everyone should be more concerned over health and safety issues versus "killing a deal" anyway, not to mention major liability issues.

Thank you for the informative post and it was very interesting to read the responses.

Jun 17, 2008 08:52 PM