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Full Disclosure of Material Facts

DEFINITION

The requirement of licensees to disclose vital facts concerning the transaction that may affect the decision of the buyer, seller, or other agent.

EXPLANATION

This area of real estate highlights the question of integrity as well as researching the history of a listing prior to buying/representing/selling. Even if the intent of the agent/broker was in good faith, any misleading along with any uncertain information or unanswered questions that could lead to a controversial outcome when buying or selling can lead to civil consequences. All sellers as well as brokers/agents must abide by the basic rules of ethics, loyalty, and integrity when making any potential deal with a future buyer.

FDMF and the Law:

Full Disclosure of Materials Facts is a law in real estate where the rules and regulations vary depending on which state the listing is in. Analyzing and obtaining a thorough background of the listing as well as understanding the state laws are equally important and necessary in order to avoid any issues during the transaction. If a seller and a broker fail to disclose the information required by law, if convicted of foul play or any illegal act, the plaintiff may be entitled to economic, punitive, and even emotional damages in a court of law.

Consultation:

It is also important to seek a second opinion. In most cases buyers are highly recommended to get in contact with a property appraiser and or an attorney who has expertise in real estate related matters. This way the buyer will be more aware of both their own rights as well as making the best possible deal when closing with an agent/broker. Furthermore, it is crucial for all parties to make sure they hang on to all forms, documents, records, transactions related to any dealings. These decisions could save potential buyers both time and give them a better understanding of what the listing they are seeking is truly valued at.

Example:

If a home had a previous history of flood occurrences, despite the fact such an impairment may have taken place in the past, such information should be delivered to a potential client. This could be vital as it may very well lead an individual to reconsider as to whether or not they would like to pursue this particular listing. Some other primary examples of disclosure buyers seek and expect from a broker and seller is to release details of the past history of the listing. Such questions include as to whether or not there was a possible homicide which took place in the years past, as well as any major repairs and fixes to damages the property may have suffered in the past.

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