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The implications for Ohio REALTORS of the recent court ruling regarding a duty to disclose

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

In last week’s article, I discussed a recent appellate court decision involving a REALTOR’s duty to disclose the criminal background of a neighbor. In that case, the court ruled in favor of the buyer’s agent and the brokerage, finding that the fact that the neighbor had recently been released from prison for kidnapping and attempted murder of a 13-year-old girl was not a material fact of the transaction or a defect that had to be disclosed to the buyer.

So does this case mean that REALTORS in Ohio never have to disclose the presence of a convicted felon or other offsite conditions to a purchaser? Not necessarily. First, this is a decision from the First Appellate District Court in Hamilton County. As such, while it creates a precedent in Hamilton County, it is not binding precedent statewide. That would only occur if the case is accepted by the Ohio Supreme Court and it upholds the decision of the Court of Appeals.

Secondly, in this case the court found there was no evidence that the buyer’s agent knew that the next door neighbor’s son had moved in with them following his release from prison. In its decision, the court did not go so far as to state that real estate licensees never have an affirmative duty to disclose offsite conditions… instead its ruling was based upon the facts presented in this case. Thus, in a case with different facts another court could rule differently. For this reason, when faced with knowledge of an offsite condition such as this, the seller and REALTOR should seek legal counsel as to whether this condition should be disclosed. Obviously disclosure to the buyer is the safest way to avoid potential liability. But again, this is a decision that should be made with the seller’s consent and the advice of legal counsel.

Finally, to help avoid potential liability for nondisclosure of offsite conditions, brokers should make sure that the purchase contract they use includes language stating that the seller is not making any representations regarding offsite conditions and establishing that it is the purchaser’s responsibility to conduct their own due diligence. This is important because the Court of Appeals in this case appeared to give weight to language in the purchase contract that stated the “seller makes no representations with regard to conditions outside the boundaries of the real estate, including crime statistics… and Buyer assumes sole responsibility for researching such conditions.” While the Court also cited similar language regarding offsite conditions in the Ohio Residential Property Disclosure Form, use of this form is not required in all residential transactions (i.e., estate sales, new construction). Therefore, to avoid a claim for failure to disclose an offsite condition, it is important to make sure that such a clause is contained in the purchase contract signed by the buyer and that the clause is written broadly enough to cover any type of offsite condition, not just the presence of a person with a criminal record.

 

Legal articles provided in the OAR Daily Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney. 

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