Full Disclosure

One thing that differentiates selling a property in Probate from other real estate transactions is that the seller – the Executor or Administrator – may have no first-hand knowledge of the property. It’s even possible that they’ve never been to the property before taking on the role of administering the estate.

This makes the job of the Listing Agent more challenging. When selling property, it is vitally important that real estate agents disclose anything they know about the property which might influence a buyer’s purchase decision.  If material facts are not disclosed, and the agent knew about them, there can be costly legal consequences.

Under Probate law, the seller isn’t required to complete a Real Estate Transfer Disclosure Statement questionnaire nor arrange for a Natural Hazard Disclosure Statement.   These documents, which are standard in a regular sale, give real estate agents and buyers a significant amount of information from which to make informed decisions about the desirability of the property.

Without these disclosures to refer to, we as Realtors® find ourselves sifting through information garnered from conversations with family, neighbors and even the local mail carrier to comply with our obligation to fully disclose material facts about the property. At Aronsohn & So Probate Realty, we err on the side of disclosing too much rather than too little to protect our client from later claims.  But, where do we draw the line? Our main purpose is to get the highest price and most favorable terms for the seller, and we certainly don’t want to scare off potential buyers with information that isn’t relevant, or worse, isn’t accurate.

A preliminary title report is our starting point – it displays anything that has been recorded with the government regarding the property, including how many times it was sold, whether there are any liens against the property, or pending litigation. 

If asked, we always disclose whether or not anyone has died in the property.   We disclose that when we toured the property, we saw evidence of rat droppings.  Those cracks on the wall and ceiling?  We concur that we see them, but we have no authority to say what caused them, whether it was just the normal shifting and settling of a home, or that it indicates an unsound foundation. We also disclose multiple times that the property is being sold as-is, where-is, and that it is incumbent upon the buyer to conduct investigations to ascertain condition, verify the square footage, and check for proper permitting.

It gets tricky when information comes to us with an opinion or emotion.  Picture ‘Gladys Kravitz’, the next-door neighbor.  She has a lot to say about everything.  She didn’t like the way the deceased wouldn’t chat with her.  She thinks he was into something nasty – like drug dealing, or, come to think of it, he reminded her of that teacher from Breaking Bad…

If you were the real estate agent, which of these items would you feel obligated to report to potential buyers?

1. The former owner liked to tinker with cars in his garage.

2. A woman stopped by the open house and said that she was worried about a rumor that there was a cluster of childhood cancer cases in the neighborhood.

3. A major celebrity lives at the end of the block.

4. The former owner was diagnosed with schizophrenia.

5. A representative for an alarm company tells you that a year ago there was an unsolved homicide down the street.

6. The local rep for Eezyduzzit Exterminators dropped by to see if the owners ‘ever got that ant infestation under control.’ You look down and see a trail of ants leading into the crawlspace.

7.  There is no fan in the bathroom, nor a window, and you notice dark marks on the wall near the ceiling…mold?  You don’t know…

According to our compliance officer, you need not disclose any of these assertions:

1. Unless by ‘tinker’ you mean that the owner had an actual body shop where oil was changed, and he’d had fuel tanks installed beneath the garage.  2. Hearsay and rumor need not be spread. 3. Doesn’t everyone want to live down the street from a celebrity ;-) However, are there tour buses passing the property several times a day hoping to glimpse the celebrity? This might be worth disclosing. 4. Schizophrenia is not contagious, and there’s no need to disclose this kind of personal information. 5. The murder was not on the property you’re listing; no need to disclose. 6. You have been given no facts, and may infer that this guy is just trying to drum up business. 7. Unless a qualified mold specialist has told you that there is evidence of mold, you can leave this discovery to the buyer’s inspector.

So, the moral of this story is that if you are purchasing a Probate listing, heed the warnings of the listing agent to confirm that permits are in place, confirm the square footage, and hire excellent inspectors to help you discover exactly what you are buying.