By ANDREW J. LUCA
The housing market’s meteoric rise in sale prices during the pandemic has led to a cautionary tale.
During the past 15 months, many residential buyers found themselves out-bid on their “dream home.” Others, due to the real estate frenzy, were prevented from making an offer on that picket-fenced gem because it was sold before it even made its way to the MLS (Multiple Listing Service).
As a result, eager buyers fearful of missing out on that next home began: (1) waiving home inspections; (2) releasing the three-day attorney review period; (3) not requesting Sellers Disclosure Statements and (4) buying properties sight unseen.
These are just a few actions considered unthinkable pre-COVID. Many of these same home purchasers, with the clarity of time and the painful out-of-pocket expense of replacing a roof or a leaking hot water heater, are finding these negotiated sales tactics a costly misstep.
Protections Not Waived:
If you purchased your home during the pandemic – congratulations. Many see home ownership as a bold checkmark on the list of “to-do’s” for realizing the American Dream.
However, if you did waive one or more of your rights listed above, don’t panic. You still have rights under the laws in New Jersey, your Real Estate Contract, and any transferrable warranties or repair/replacement guarantees that flowed to you as the purchaser of that home.
Check the documents handed to you at closing and review those provided to you during the transaction by your realtor.
The recent marketplace for residential homes has been a boon for sellers. For some, it may have created a temptation not to disclose (or possibly hide) a known defect such as a failed roof patch or leaking pipe.
If one of these undisclosed examples were found after you took possession of the home, feel free to bring your concerns to your realtor, the sellers’ realtor or the sellers themselves.
If your realtor represented only your side of the transaction, that licensed individual owed you a fiduciary obligation to protect your interests from visible signs of problems or defects in the home.
Your realtor is also required, as your fiduciary, to inform you of any information they personally are aware of about the property, regardless of where or when they obtained that information.
Disclosures by Realtors:
A realtor may have personal knowledge about a home. For example: sellers hire a realtor to sell their home on the condition the realtor promises not to tell anyone that the Association fees are going up next year, or, that the septic system is not operational.
In every instance, the sellers’ realty agent is prohibited from keeping that information confidential and would be required to disclose those defects to potential buyers.
Unless the sellers renounce their wayward ultimatum, neither party may wish to pursue their business relationship further and they part ways. That same realtor now personally knows about the looming fee hike and/or broken septic system.
If that realtor returns to that same house representing potential buyers, that licensed realtor is required to disclose their knowledge of the home’s pending Association fees or busted septic system to their buyers without regard to the home seller’s prior muzzling attempts.
That same information (fees/septic) may be imputed to that realtors’ co-workers at their realty brokerage as well.
Duty of Fairness:
Alternatively, if the sellers’ realtor succeeded in changing their clients’ prior position and the increased Association fees and/or the non-operational septic system was disclosed, that same realtor still has an independent duty to potential buyers.
While a realtor’s allegiance is to their own clients, every realtor working for either a seller or a buyer (or both in the instances of disclosed dual agency) still owes a Duty of Fairness to the party on the other side of the transaction.
New Jersey realtors are licensed by the state and in exercising their Duty of Fairness to all, must be truthful and never act to mislead during the execution of their professional responsibilities.
In closing, eager home buyers, who lay awake at night regretting having waived some of their rights during the negotiation process when buying their home, still have many legal and contractual rights to call upon to protect themselves, their financial interests and the home of their dreams.
About the Author: Andrew J. Luca, Esquire, is a co-founding member of the CKL Law Group, LLP and has been practicing Real Estate and Consumer Fraud law in New Jersey for nearly 20 years.