. . . Unresolved Questions
The Holmes case raises a plethora of potential issues and concerns for real estate agents and brokers:
What is the threshold for the disclosure obligation to kick in? What does “far exceeds” mean? What is a “substantial discount”? What constitutes a “considerable amount” of cash?
Exactly what is the extent of the required disclosure – current principal balances and/or status of lender negotiations with the property owner?
What other types of closing “impediments” could be required to be disclosed?
Will the holding be limited to residential property sales, or will it be applicable to commercial transactions as well? Is there any public policy or practical concern that should cause commercial transactions to be treated differently? (Note that the court bolstered its holding by citing to a commercial real property case, Jacobs v. Freeman, 104 Cal. App. 3d 177 (1980).)
Only time will tell how this decision will play out. In the interim, brokers need to proceed cautiously and to work closely with
their sellers to make sure that all material information relating to potential sale “impediments” is fully disclosed, in addition
to the customary disclosures relating to the desirability or utility of the property. This requirement may add an additional layer of complexity to the relationship between the broker and its seller.
(emphasis added)
It’s going to get interesting. I don’t see “deadbeat sellers” and their agents being able to withhold information material to the consummation of a sale and piecemeal it out to buyers at whim anymore (as each “problem” becomes an issue) without incurring liability to themselves and their brokers.
