lou tulga ccim crb disclosure in real estate in new mexico

Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved

1

Disclosure in Real Estate

6 Education Credit Hours

Lou Tulga CCIM CRB

February 2012

www.loutulga.com

http://www.loutulga.com/

2Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved

Background to Disclosure in Real Estate

Under caveat emptor

Under an agency relationship with seller

Under expanding consumer rights

License Law

Common Law

Code of Ethics


When NOT to Disclose

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


Breadth of Disclosure Items

Brokerage Relationships

Inherent/Situational Conflicts of Interest

Property Condition and Repair

Potential for Allergens

County Assessor Estimated Tax Levy

Lead Based Paint Hazard Disclosure

Required RESPA Disclosures

Etc. ____________________________________


Significance of “Material Fact”

Black’s Law Dictionary Definition

Real Estate Broker’s Paraphrase

Material Facts about What?


Disclosure Issues

Actual Knowledge

Should Have Known

On the Premises

Off-Site

Involvement with Sources of Information

Communication to other Brokers

Communication/Documentation to Clients


Disclosure and Common Sense

Disclosure and determination of material fact

Disclosure and use of as is clauses in contracts

Disclosure and use of disclaimers

Disclosure and documentation and acknowledgment

Etc. ________________________________


Sources of Potential Liability

Statute Liability Federal State Local

Common Law Contract Agency Tort


Failure to Disclose

Actual Damages

Possible Punitive Damages

Possible Criminal Charges

Rescission where Damages Insufficient


Common Law of Tort

Fraud

Active Passive

“Actual fraud consists of deceit, artifice, trick, design…[and] the successful employment of any cunning, deception, or artifice used to circumvent or cheat another” (Black’s Law Dictionary)


Common Law of Tort

Negligent Misrepresentation

“Negligent misrepresentation occurs where a person misrepresents a material fact which is believed to be true but is false and it is made for the purpose of being relied upon and is acted upon by the party to the party’s injury”



Disclosure and red flags

Disclosure and stigmatized property

Disclosure and fair housing: properties,not people

Disclosure and consumer consent



Disclosure and determination of material fact

Disclosure and use of as is clauses in contracts

Disclosure and use of disclaimers

Disclosure and documentation and acknowledgment


Negligent Misrepresentation

The Language of Real Estate, John W. Reilly states: "It is not necessary that a person actually intend to misrepresent a fact. A broker or salesperson is liable if he or she knows or should have known of the falsity of a statement. Thus, if a broker makes a negligent misrepresentation of a material fact to induce a buyer to buyer, and the buyer relies on this fact to his or her detriment, then the broker is liable. The seller is also liable because the statement was made by his or her agent within the scope of authority of the agency."


Common Law of Torts

Negligence Negligence is “the omission to do something

which a reasonable person, guided by those ordinary considerations which ordinarily regulate human affairs, would do, or the doing of something which a reasonable and prudent person would not do.” (Blacks’ Law Dictionary)


New Mexico Case Law

Neff v Bud Lewis (1976)

Amato v Rathbun (1982)

Gouveia v City Corp (1984)


Seller’s Property Disclosure Statement

Easton v. Strassburger (CA 1984)

Colorado Model: “Yes, No, Don’t Know, N/A”

New Mexico Model--"Is the Seller Aware of?” Yes □ No □

Benefit of Seller’s Disclosure Statement


MANDATORY LEAD-BASED PAINT/HAZARD DISCLOSURE

Rationale.

The Residential Lead-Based Paint Hazard Reduction Act of 1992.

Applies only to “target housing”—dwellings built prior to 1978.

The law does not require testing or abatement.


Agent’s Certification

Agent has informed the Seller of the Seller’s obligations under 42 U.S.C. 4852d and Agent is aware of Agent’s responsibility to insure compliance. Under Regulations, agent means “any party who enters into a contract with a seller or lessor, including any party who enters into a contract with a representative of the seller or lessor, for the purpose of selling or leasing housing constructed prior to 1978. This term does not apply to Buyers or any Buyer’s representative who receives all compensation from the Buyer.” This definition includes any cooperating licensee or subagent, and any buyer’s agent who receives any compensation from the listing broker or the seller.


Superfund Responsible Parties

Strict Liability

Current owner and operator of the site

Party who generated the contamination

Party who transported the contamination


PSYCHOLOGICALLY IMPACTED PROPERTY

Definition

Real Estate Disclosure Act 47-13-1 through 3 NMSA 1978

Section 1. Disclosure of Material Fact in Real Estate Transactions


Exemptions

A seller, lessor, or landlord of real property, including a participant in an exchange of real property, and any agent involved in such a transaction, shall not be liable for his failure to disclose and shall not have a duty to disclose to any person who acquires by voluntary or involuntary transfer, a legal or equitable interest in the real property, including any leasehold interest or security interest for an obligation, the fact that the real property is or has been:


Exemptions

The site of a natural death; The site of a homicide, suicide, assault, sexual assault or any other crime punishable as a felony; orOwned or occupied by a person exposed to, infected or suspected to be infected with the human immunodeficiency virus or diagnosed to be suffering from acquired immune deficiency syndrome or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted to others through occupancy of improvements on real property or that is not known to be transmitted through occupancy of improvements located on the real property


Exemptions

The failure to make a disclosure of any of the facts or suspicions described in Section 1 shall not be deemed to be grounds for termination or rescission of any sale, lease, exchange or any transaction in which an interest in the real property has been or will be conveyed to another


No Cause of Action

No cause of action shall arise against a seller, lessor or landlord of real property, including a participant in an exchange of real property, and any agents involved in such a transaction, for failure to disclose to any person who, by voluntary or involuntary transfer, acquires a legal or equitable interest in the real property, including any leasehold interest or security interest for an obligation, in any action at law or in equity because of the failure to disclose that the real property was or is suspected to have been the site of the incidents described in Section 1.


No Duty to Disclose in New Mexico

The site of a natural death ,homicide, suicide, assault, sexual assault or any other crime punishable as a felony

Owned or occupied by a person exposed to, infected or suspected to be infected with the human immunodeficiency virus or diagnosed to be suffering from acquired immune deficiency syndrome or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted to others through occupancy of improvements on real property or that is not known to be transmitted through occupancy of improvements located on the real property.


Part 19 Required Disclosures—”Trigger Event”

Prior to the time the Licensee generates or presents any written document that has the potential to become an Express Written Agreement, written disclosure of (a) any written Brokerage Relationship that the Licensee has with any other Parties to the Transaction and/or (b) any material interest or relationship of a business, personal, or family nature that the Licensee has in the Transaction;


Required Disclosures

Range of Brokerage Relationships in NM

Written Copy of Broker Duties

Written Disclosure of Existing Written Contract with the other party to a potential transaction

Written Disclosure of Broker’s conflicts of interest –personal, business, financial, etc.


RANM Cover Page Disclosures

Listing Cover Page

Buyer’s Broker Agreement Cover Page

Purchase Agreement Cover Page


Disclosure in Real Estate Approved by the New Mexico Real Estate Commission for

6 Education CE Credit Hours

Contact--Lou Tulga CCIM CRB 3200 Carlisle NE Suite 224 Albuquerque, NM 87110 Voice 505-889-

4569 Fax 505-212-0148

[email protected] www.loutulga.com

mailto:[email protected]

http://www.loutulga.com/

lou tulga ccim crb disclosure in real estate in new mexico

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