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Hamptons.com
March 8, 2019

What Should A Real Estate Broker Disclose About A Property?

John A. Viterittiby John A. Viteritti
in Real Estate
Home Real Estate

After a two-year absence, I wish to thank Hamptons.com for welcoming me back to write a monthly article for publication. I hope you, the reader, will find them helpful and interesting.

What should a real estate broker disclose about a property? This is a question real estate brokers agonize over. There is statute and case law that address this issue, not always apparently with consistence, depending upon the variables of the situation.

The case of Belizaire v. Keller Williams Landmark II, a Nassau County Supreme Court case handed down on October 16, 2018, where my colleague Al Fazio’s law firm, Capruder Fazio Giacoia represented the defendant, provides one example. The broker, Keller Williams, was retained by the seller to represent him in the sale of his property. The broker made it clear by having the seller sign an agency disclosure form required by law that he was representing the seller, not the buyer. The broker prepared a data sheet provided to him by the seller and submitted the information to the Long Island Board of Realtors Multiple Listing Service. The real estate taxes listed were incorrect, lower than they were. The buyer submitted an offer which was accepted by the seller. The title search ordered by the buyer’s attorney showed the true taxes. The seller and the buyer went ahead with the closing and title transferred. The purchaser commenced a lawsuit against the broker accusing him of intentionally providing false information regarding the taxes in order to induce the buyer into making an offer.

The court pointed out that the buyer did not provide any proof for the allegation that the broker had intentionally misrepresented the taxes. It further stated, that the amount of the taxes was a matter of public record discoverable by the buyer, and under New York Law which adheres to the doctrine caveat emptor, buyer beware, could have ascertained the taxes, especially since the broker had made it clear that he was representing the seller, not the buyer. It further stated that the buyer did accept the property at closing after it knew what the true taxes were.

The court dismissed the charges against the broker.

Anthony Gatto, Director of Legal Services for the New York State Association of Realtors, (NYSAR), issued a memorandum to its 60,000 plus members regarding this case. In part, he stated: “Under Section 443 of New York State License Law, listing agents do have a duty to disclose material defects to buyer customers. Under Section 443 of New York State Real Property Law, must disclose all facts known to the agent materially affecting the value or desirability of the property, except as otherwise provided by law.” He goes on to say: “The amount of real estate taxes on the property, are not a material defect, as they do not physically affect the property.” He adds this advice: “Based on this decision, it would be a best practice for all NYSAR members acting as a buyer’s agent to verify the taxes with the municipality and school district where the property is located.”

At the risk of appearing facetious, I would recommend that it is a good practice to get the taxes right no matter who you are representing.

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