Winston Salem| What is a Material Fact when selling Your Home?

Helpful Information from Your Winston Salem Realtor!

A material fact is ANY fact that could affect a reasonable person’s decision to buy, sell, or lease.

What are the four categories of material facts? 

The four categories of material facts are: 

• facts about the property itself;

• facts that relate directly to the property; 

• facts directly affecting the principal’s ability to complete the transaction; and 

• facts that are known to be of special importance to a party

One of the confusing things about this category are items that relate to the property but not directly a part of the property!

Facts that relate directly to the property 

This category includes factors that are external to or outside of the property that affect the use, desirability, or value such as: 

• a pending zoning change, • existence of restrictive covenants, 

• plans to widen a street, or 

 • plans to build a shopping center adjacent to a property. 

How can zoning affect a property? 

Zoning classifications will ultimately affect how a property can be used by a client/customer. For instance, zoning classifications affect whether or not a property is considered residential, mixed use, or commercial, etc. Therefore, brokers must analyze the zoning classification of a property to determine whether or not the property can be used for the intended purpose for which it is purchased. For example, if a client/customer purchases a lot with the intent to construct a home, the broker would need to ensure that the lot is zoned for residential purposes. 

How does the existence of restrictive covenants affect a property? 

The existence or nonexistence of restrictive covenants is a material fact. However, the specific restrictions within the covenants become material facts when they are of special importance to a party. For example, if restrictive covenants exist for a property, the covenants may prohibit a property from having certain animals, an in-ground swimming pool, and/or the parking of commercial vehicles in the neighborhood. 

If these covenants do exist, they may affect how desirable the property is to future buyers. Therefore, brokers must disclose the existence of restrictive covenants, advise consumers on where to obtain a copy, and recommend consumers seek legal advice regarding the applicability of the covenants. It is not the broker’s responsibility to interpret the covenants.  

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