By Justin Davidson, MAR General Counsel & Catherine Taylor, Associate Counsel
Q: I listed a house that had a material defect. The seller did not want to disclose that fact to potential buyers and fired me. They have now re-listed the property with another agent and the listing does not disclose the defect – what are my obligations?
A: Chapter 93A states that it is an unfair or deceptive act if a person acting in trade or commerce “fails to disclose to a potential buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” Failure to disclose any material defect of which you, as the Realtor®, are aware, exposes you to liability. You are only obligated to carry out the lawful instructions of your seller client. In this scenario, any instruction to hide a material defect would be unlawful and you would not be bound by any duty of obedience.
But what happens with that knowledge after you are no longer involved in the sale? Your disclosure obligations under Chapter 93A do not extend beyond the period of representation. There is no obligation for you to pass along any knowledge you may have to a subsequent agent; however, you do NOT have a duty to keep that information confidential. The continued duty of confidentiality survives termination of the agency relationship, but does not apply to legally required disclosures, such as known physical hazardous conditions of property.
Q.Can a Buyer Agent place a “sold” sign on the lawn of my listing?
A.Yes, as long as the buyer agent actually participated in the transaction, a “sold” sign is permissible and in compliance with Article 12 of the Realtor® Code of Ethics’ requirement that Realtors® be honest and truthful in all communications. Standard of Practice 12-7 provides additional guidance on this specific topic, stating:
Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have “sold” the property. Prior to closing, a cooperating broker may post a “sold” sign only with the consent of the listing broker.
A buyer agent may also place a “sold” sign on the property after a transaction has closed and the buyer provides their consent. After the sale is completed, neither the seller nor the listing agent has any control over whether a buyer’s agent places a sign on the property.
The information and services provided through the Massachusetts Association of Realtors® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of Realtors®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The Massachusetts Association of Realtors® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at firstname.lastname@example.org.