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Legally speaking: Help! My buyer is a sexual predator!

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. This one involves having a client that is a registered sexual predator…   

Q:  I represent a buyer who is classified as a sexual predator. He is in contract to buy a house listed with another brokerage which is scheduled to close next week. I just got an irate call from the listing agent telling me that the seller found out that the buyer is a sexual predator from a neighbor. The entire neighborhood is upset and the seller wants out of the contract. The seller and listing agent both claim that I should have disclosed this to them. Did I have to disclose it? Can the seller terminate the contract?

Also, If the buyer decides to walk away from this transaction do I have to continue to represent him in the purchase of another home? My broker doesn’t want the community to be upset and is worried about the impact it may have on our business when it comes out that we represented this buyer.

A: There is no Ohio law (statutory or case law) that specifically requires a buyer’s agent to disclose to a seller or listing agent that the buyer is a sexual predator. In fact, doing so might be considered a breach of your fiduciary duty to the buyer if the buyer considers this information to be confidential. Thus, in my opinion you could only have disclosed the buyer’s status if the buyer consented to such a disclosure. Certainly if this sale closes, the buyer will have a duty to notify the sheriff’s office prior to moving in. If the offender is subject to the community notification requirements, the sheriff must then follow the procedures contained in Megan’s Law and notify the neighbors, local schools, etc.

As to the enforceability of the purchase contract, although there is no Ohio case law to date on this issue, I think it is doubtful that the buyer’s status as a sexual predator would be grounds to terminate the contract. The buyer should be referred to his own attorney on this issue.

Your final question involves terminating your agency relationship with the buyer. The biggest concern that arises when a REALTOR does not want to represent someone is whether that refusal violates the fair housing laws. That would certainly be the case if the refusal to represent a buyer or seller is based upon that person’s membership in a protected class. Of course sexual predators and offenders are not a protected class. If the buyer does happen to be in a protected class, to avoid a fair housing allegation, it would be crucial to establish that your termination of the agency relationship was not based on that class status and was instead only based on the fact that the buyer is a sexual predator.

A second issue involved with terminating your representation of the buyer could possibly arise if you have a written exclusive buyer agency contract with the buyer. If so, the buyer could attempt to bring a breach of contract action against you and the brokerage for terminating the agreement. Of course whether such an action would be successful, would depend upon the specific terms of your buyer agreement and whether the buyer could establish that he was damaged by a breach of that contract. Therefore, I recommend you consult with your brokerage’s attorney to review this agreement and provide you with counsel.

Tags: legal, Legally Speaking