The House Detective: by Barry Stone, Certified Home Inspector
Dear Barry: I am a Realtor and recently closed escrow on a bank-owned property. The bank insisted on an “as is” sale, which is customary with foreclosed homes. My buyers hired a home inspector but decided to forego a termite inspection. After moving in, they found termite damage in the kitchen and dining room. We’ve also learned that the listing agent knew about this damage but withheld disclosure because it was an “as-is” deal and because the seller (the bank) was not required to disclose defects. Do you think my buyers have recourse? Karen
Dear Karen: People often misconstrue the term “as is” to mean a release from the requirements of real estate disclosure laws. In the case of lenders who foreclose on delinquent mortgages, there is, in fact, an exclusion from the requirement to disclose. But this exclusion does not excuse Realtors who withhold disclosure of known defects. The requirement to disclose all known defects is an ethical and legal imperative for all real estate agents. Withholding knowledge of a defect, such as termite damage, is not acceptable for an agent, even when the seller of the property is a bank.
In the situation at hand, the listing agent should pay to repair the undisclosed damages. If the agent does not accept that responsibility, the matter should be reported to the state agency that licenses real estate professionals. The complaint, however, should be filed by the buyers, not by another agent.