San Jose Short Sales –Duty to Disclose
A buyer sued his California listing agent for negligence, negligent misrepresentation, and deceit (fraud) based on misrepresentation and a failure to disclose. The case was dismissed by the trial court. The buyer appealed. The appellate court had to decide if the listing agent owed a duty of disclosure to the buyer.
In October 2010 the Court of Appeal reversed a trial court’s judgment holding that “a real estate broker who lists a property that is so over-encumbered that it can only be sold by short sale or if the seller deposits a substantial sum of cash into escrow, the broker must disclose this state of affairs to the buyer.” [emphasis added]
If a San Jose Realty listing agent is aware that the amount of existing liens exceeds the sales price then the listing agent has a duty to disclose this fact to the buyer. A broker can be held liable for failing to disclose any facts that materially affect the value or desirability of the property which is not known or easily observable to the buyer. This duty helps protect buyers from harm by providing information which allows buyers to make informed buying decisions.
The absence of a San Jose short sales contingency and/or disclosure indicating that the seller agrees to deposit cash into escrow may actually subject the seller to liability to the buyer for breach of contract when the seller cannot perform as promised.
A San Jose Real Estate Agent has a duty to disclose short sale status including when sellers cover the shortfall and lender approval is not required.
San Jose Short Sales –Duty to Disclose – by Kathleen Daniels, San Jose Real Estate Agent.