Real Estate Law booksMany REALTORS® and investors have made a lot of money buying and selling real estate in the last two years.  However, REALTORS® and sellers may face unwanted liability if they are not careful.  Nondisclosure lawsuits are on the rise, and REALTORS® are a prime target.[1]  But REALTORS® can guard against these nondisclosure lawsuits by performing the necessary due diligence to limit their legal exposure and fulfill their professional obligations at the same time. [2]

While not exhaustive, the following is a brief checklist to help sellers’ agents fulfill their due diligence obligations by disclosing any information that they have that might materially affect the consideration to be paid:

Yes No Description
I have reviewed the AAR Sellers Property Disclosure Statement (SPDS)   with my client.
I have reviewed the purchase contract with my client.
I have recommended two or three certified inspectors to my client,   and I have talked with the inspector about any problem areas.
I have recommended that my client hire any experts for any problem   areas that the inspector found.
I have asked my client about any insurance claims on the Property
I have looked for signs of water damage in the property and asked the   inspector about any bulges or discoloration in the drywall.
I have asked the homeowner about any prior tenants and asked for a   copy of the disposition of deposits.
I have reached out to the prior tenants to ask about any repairs.
I have asked my client to produce any prior inspection reports and   disclosed same (if available).
I have asked my client for a list of any receipts for repairs that he   or she made to the property.
I have asked my client for a list of repairs that he or she made to   property.
I have talked to the neighbors to see if there are any issues or   problems with the property.
I have discussed the importance of the disclosure requirement with my   client.
I have asked my client if the property was involved in a lawsuit. If   yes, I have asked for a copy of the lawsuit to disclose a copy of same to the   potential buyer.
I have called a title insurer prior to selling the home to see if   there are any pre-existing liens on the property.
I have disclosed any information that might suggest that my client is   unable to perform
I have disclosed any lien or encumbrance on the property


The REALTOR’s® duty to disclose is an extremely serious obligation.  A REALTOR® may get sued for selling a home with a previous fire or flood, and failing to disclose same. These lawsuits may result in financial liability for the brokerage, higher insurance premiums, the loss of the REALTOR’s® commission, and black marks on the REALTOR’s® license, simply because he or she did not ask the right questions of his clients prior to selling the property.  To limit such legal liability, the above checklist is a nice starting point and hopes to ensure that every broker and salesperson conducts the necessary due diligence prior to selling a property.

Of course, if you have questions about what to disclose or are accused of failing to disclose material defects in residential real estate, then please do contact an experienced real estate attorney straightaway.  Your career depends on it.

You can download the Realtor Checklist here.

If you have further questions about Real Estate issues, please call our office at 480-733-6800 and ask to speak with attorney David Degnan. Attorney Degnan handles Real Estate representation, Business Law and Construction Law.


[1] See A.A.C. R4-28-1101(I) (“A sales person or broker shall take reasonable steps to assist a client in confirming the accuracy of information relevant to the transaction.”).

[2] A.A.C. R4-28-1101(B) (“A licensee . . . shall disclose in writing . . . any information . . . that materially or adversely affects the consideration to be paid.”).