Thanks so much for checking out the Real Estate Today podcast. Right now we’re gonna talk about misrepresentation.
Bob Nelson: I’m Bob Nelson, Eugene commercial real estate investment broker with Pacwest Real Estate Investments.
Marcia Edwards: And I’m Marcia Edwards, a residential broker with Windermere Real Estate. We’re talking about things that come up in the typical real estate transaction, or often enough, especially named when you’re writing the contract. When that contract’s being written, when a buyer’s proposing something to a seller, the contracts that we have try to help you look at the edges, not just if this goes well, but if it goes sideways, what would be the situation and how would it be handled?
Bob Nelson: Right, how would it be handled without necessarily throwing rocks and guns into the argument? It’s an interesting process. As we negotiate, the issue always is, has the seller disclosed those latent or hidden property defects, those defects that would not necessarily be discovered by the casual inspection of the property? Now, the term casual is not that we have gaggled along with a piece of straw hanging out of our lips whistling at the bluebirds. No, this is a person who is not professionally oriented to knowing where defects would typically occur with that type of property. That’s why we bring the inspectors in so that we have a professional looking at the thing, that as a buyer looks, the vast, vast, vast majority of them are not professionally oriented to be able to spot defects. At that point, a seller’s obligation by common law is to disclose those items that are hidden from view, hidden from at least casual view, and make that disclosure in order to be held harmless of, later, misrepresentation.
Marcia Edwards: Let me give you an example of that. I had a listing recently that had had a fire in the basement. It’s a full basement. Had a fire when it was used for coal as a heat source down there, so it’s an old home. We have an engineering report that said that this is okay now and it’s sold, and the structure has been rebuilt to standards that will be great and actually better than what was previous. The conversation was, “When do we share this, Marcia? How much of this do we share?” What you’re suggesting and me, from our experience, is early, often, and wide open. You definitely want to, as the seller, even if it wasn’t exactly that idyllic of a result, you want to make sure the buyer understands what they’re getting into.
Bob Nelson: They also understand that as the disclosure is made, the price probably comes down accordingly. But I tell you that you have an obligation of common law, lawsuit law if you will, to make that disclosure, and if you don’t that’s a misrepresentation.
Marcia Edwards: I’m Marcia Edwards, Windermere Real Estate.
Bob Nelson: And I’m Bob Nelson, Eugene commercial real estate investment broker with Pacwest Real Estate Investments.