Disclosing Material Facts By Seller

 At Carolina Living Real Estate, we are always trying to educate our clients on various real estate subjects.  Below is a good one for property owners to understand.   As always, you can call us to discuss anything.  

 Below is an article posted on the Realtor website.

You must disclose even if can't be detected by usual means!   See WHY!

QUESTION: Offer to Purchase and Contract (Form 2-T) – The seller failed to disclose a defect related to the property. Can my client terminate and get their Due Diligence Fee back?

ANSWER: A seller ordinarily is not required to disclose facts about their property. However, a seller must disclose material facts when such facts are only known to the seller and not within the diligent attention, observation, and judgment of the buyer. In other words, if there is a material latent defect on the property only known to the seller, and the buyer cannot discover the defect through reasonable diligence, the seller has a mandatory duty to disclose.

If a buyer goes under contract, and it is later revealed that the seller failed to disclose a mandatory material fact or made a misrepresentation that the buyer reasonably relied upon, then the buyer could have several legal claims. The claims would vary case to case, but if successful, the buyer could be entitled to damages. Such damages could be the amount necessary to place the buyer back in the same position they would have been had the offer not been made in the first place. That amount would at least include the Due Diligence Fee. Some claims available to the buyer could award substantially more damages, plus an award of attorney’s fees.

When can I get a writ of possession after a tenant appeals the eviction order?

At Carolina Living Real Estate, we are always trying to educate our clients on various real estate subjects.  Below is a good one for property owners to understand.   As always, you can call us to discuss anything.  

 Below is an article posted on the Realtor website.

QUESTION: I run a property management company and we just won a summary ejectment case in front of our local magistrate. The tenant gave notice of appeal and I have received some information saying that I cannot get the tenant out until after the appeal is heard before a district court judge. How long will we have to wait and can’t I at least get some money for my client while we wait?

ANSWER: Congratulations on representing your landlord client successfully in court! The documents you received in the mail, following the tenant perfecting the appeal, were probably a copy of the order granting summary ejectment, the notice of appeal to district court, and the bond to stay execution on appeal of summary ejectment, which you can view here.

First, unlike the process in small claims court, an appeal to district court is a bit more formal. Generally, only attorneys or individuals appearing on their own behalf can appear in district court to argue the case. The district court will be more formal in receiving evidence by requiring the admission of documents and the formal examination of witnesses. Lastly, some counties do not automatically set the date for the appeal to be heard and an attorney or either the plaintiff or defendant will have to contact the trial court administrator and follow the local rules of court to request and set a date for hearing the appeal. While either party can request that the appeal be heard at the first session of court after the appeal is docketed, it can be quite some time before the court will have time to hear the matter.

In the meantime, if you read the fine print on the bond form you received, you will see that there are three requirements for a tenant to remain in possession pending the appeal. First, all defendants named in the summary ejectment action had to sign the bond and promise to pay rent to the clerk of court as it becomes due. Second, the defendants must pay the undisputed past-due rent to the clerk. Third, if there are more than five days left before the end of the rental period at the time the summary ejectment was ordered, the tenants will have to pay the prorated rent for the remainder of the month to the clerk.

Most importantly, the final paragraph on the bond form requires tenants to make payment of all future rents within the first five business days of each month. While the rent will be paid to the court, an attorney representing the landlord can make application for release of undisputed rents paid to the clerk pursuant to N.C.G.S. Section 42-34(e), found here. If the tenant fails to pay the rent by the end of the fifth business day each month, the landlord may request the clerk to issue the Writ of Possession Real Property form, linked here. If that writ is issued prior to the tenant making the monthly rental payment, the Sheriff can schedule the lockout. While the tenant will still have the right to argue the appeal, the issue of possession will no longer be pending, as the tenant failed to abide by the promises made under the bond.

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Winston Salem | Case Study about Material Facts When Selling Your Home

Note:   This also applies to those sellers that try to Sell the home themselves! 

QUESTION: I represent a seller. The house went under contract and the buyer engaged a home inspector. During the due diligence period, the buyer submitted a Due Diligence Request and Agreement (Standard Form 310-T) that listed several requested repairs. Some of the repairs were significant (an HVAC unit that must be replaced) and some were extremely minor (door stops that needed adjusting). The parties were unable to reach agreement on the repairs and the buyer terminated the contract. Now that the house is back on the market, do I have to disclose all of the items that were listed on the first buyer’s Form 310-T, even the minor ones?

ANSWER: The general rule, which is codified in both the North Carolina Real Estate License Law and the REALTOR® Code of Ethics, is that real estate agents must make a full and prompt disclosure of all facts that are material to a transaction they are involved in. The duty of disclosure relates not only to material facts the agent knows but also to material facts about which the agent should reasonably have known.

Defining what facts are material is admittedly difficult. In the Real Estate Manual published by the North Carolina Real Estate Commission, the authors write: “[A]ny definition necessarily will be somewhat vague because the concept is intended to have broad application, thereby defying specific definition. This is complicated by the fact that a given fact may be considered “material” and require disclosure in one context, but not in another. In its broadest sense, a “material fact” may be said to be any fact that is important or relevant to the issue at hand.”

When dealing with facts about the property itself, the Real Estate Manual states that any “significant property defect or abnormality” is a material fact. Examples given are a structural defect, a malfunctioning system, a leaking roof, or a drainage or flooding problem.

Applying this guidance to the facts here, it is important to distinguish between what the listing agent was told and what the agent knew. If the buyer in this case merely requested that the HVAC system be replaced without providing a report by a qualified inspector, the listing agent arguably does not know that the HVAC unit really requires replacement. However, at a minimum, the request for this “repair” is a red flag and the listing agent should inquire further. If buyer number one did provide an inspection report that noted a faulty HVAC unit, or if the agent confirms a problem with the HVAC unit, the agent will clearly have a duty to disclose that defect to subsequent buyers.  It does not matter that this fact was not known when the property was originally listed for sale, nor does it matter that a previous buyer (or their inspector) was the source of the listing agent’s knowledge.

In contrast, just because the listing agent has learned that some doorstops may need adjusting does not transform that exceedingly minor “defect” into a material fact. That is not something that needs to be investigated further or disclosed to subsequent buyers. Other examples of non-material defects include a dripping faucet, and cosmetic items like scratches on a hardwood floor and cracked ceramic tiles.