- The Washington Times - Friday, May 11, 2001

Disclosure in real estate is an issue that Maryland, Virginia and the District of Columbia take seriously. Disclosure laws in all three jurisdictions, even though they vary slightly, are in place to protect all parties involved the real estate agent, the buyer and the seller, Realtors say.

A prospective buyer encounters a disclosure form almost immediately upon choosing an agent. Agency disclosure law requires a real estate agent to lay out all real estate representation options to a prospective buyer.

"Virginia requires an agent go over agency disclosure in the first meeting with a client," says Valerie Huffman of Weichert Realty in Bethesda. "Maryland law demands [that] disclosure be discussed before an agent shows a potential buyer a listing."

Mrs. Huffman, vice president of education in Weichert's headquarters, says the District's agency disclosure laws are similar to those in Virginia.

"Agency disclosure is one of those things that protect everyone," says Dale Gabardy, an agent in Long & Foster's Burke office. "It informs people of their rights to have an agent working for them and serving their best interests."

In the District and Virginia, the law specifies four types of agency representation: a buyer's agent, designated agent, dual agent and seller's agent.

A buyer's agent can show other agencies' listings and works in the best interest of the buyer.

In designated agency, a single brokerage firm can represent both the seller and the buyer by using two agents.

In dual agency, one agent represents both the buyer and the seller as long as this arrangement is agreeable to both parties.

A seller's agent works solely for the seller.

Maryland also has buyer agency, dual agency and seller's agency. But Maryland law allows for a presumed buyer's agent, a sort of "acting agent" who can show listings to a potential buyer. However, this presumed buyer's agent cannot write contracts or negotiate.

Maryland also allows intrabrokerage agency (similar to, but different from, designated agency) between buyers and sellers, but an agent can't sell his own listing to a buyer he represents.

"This type of disclosure is so important," says Mrs. Huffman, who has been in real estate for 26 years. "So many people do not understand what they are walking into when they enter an agent's office. Potential clients need to make sure they are choosing agents who will walk them through the entire disclosure process until they are extremely comfortable with it."

Most potential buyers in this area sign contracts that provide sole representation by an agent. The buyer's agent disclosure guarantees confidentiality between an agent and the buyer and also ensures the agent is working in the best interests of the buyer.

"There are so many things that fall under this type of disclosure," says Mr. Gabardy, who has been an agent for 28 years. "You will find agent and client are more at ease in the buying process."

For example, Mrs. Huffman says, "If a buyer says to me, 'Gosh, I love that house and I would really love to get it for $175,000, but if I have to, I will pay $200,000,' I can't go in and tell the seller we are going to offer you this but will go as high as this. I have to keep that information confidential."

Mrs. Huffman and Mr. Gabardy agree that agency disclosure is extremely important because it allows agents to do their best work for their clients.

"And it just ensures that we are all on the same page whenever it comes time to start making offers on a house," Mr. Gabardy says. "If I am the buyer's agent, my clients can be sure I have their best interests in mind when I am negotiating their contract."

Disclosure also comes into play in a serious way for a seller during negotiations.

Sellers in the District must fill out a property disclosure form. In Maryland and Virginia, sellers file either a disclosure form or a disclaimer statement.

On the disclosure form is a checklist of more than 20 items within the home that should be in working order before sale. The disclosure form also gives the seller the chance to disclose any material defects in the property that could sway the opinion of a potential buyer.

In a disclaimer, the seller claims to have no knowledge of any defects in the house. It is left to the buyer to have the house inspected, usually at his own expense, to uncover any problems with the property.

"[Sellers] are required by law to disclose any needed repairs or damage to the home," Mrs. Huffman says. "If an agent knows of a defect but the seller refuses to disclose it, that agent should walk away from that property. Disclosure is a very important part of making deals stick."

Home imperfections a seller might list on a disclosure document can range from a leaky faucet to a corroded roof.

"But the important thing is to remember back as far as you can, and if you fixed something, such as a leaky faucet, just write down that you had it fixed," Mrs. Huffman says. "It's better to be overly cautious and descriptive on the document than not to write anything down at all."

Mrs. Huffman and Mr. Gabardy agree that sellers in Maryland and Virginia who aren't familiar with their property's condition should sign disclaimers instead of muddling through a disclosure agreement.

"When disclaimers are signed, I strongly urge my clients to get a home inspection," Mr. Gabardy says. "While home inspectors aren't perfect, they are thorough and will find out if the property has any problems."

Mrs. Huffman says that sometimes when disclaimers are signed, buyers might get the feeling homeowners are trying to hide something about their property.

"I have seen people walk way from deals because disclaimers were signed instead of disclosures," she says. "And while there probably are cases where something was being hidden, most of the time the homeowner signs a disclaimer because he simply doesn't know enough about his property to know if there are issues that should be disclosed. This is when a home inspection is imperative."

A home inspection often catches the majority of material imperfections with the property and appliances. But beware: In this market, Mr. Gabardy and Mrs. Huffman say, putting too many conditions in a contract could hamper getting an offer accepted on a property.

On average, more disclosures are signed in a year in Virginia than in Maryland, Mrs. Huffman says. Though some interpret that as evidence that Maryland is pro-disclosure and Virginia is anti-disclosure, it simply isn't the case, she says.

"We just have lawyers in the area who prefer one over the other," Mrs. Huffman says. "Various attorneys working within the states think one is better than the other, but the fact is, if you know something's wrong with your property, you have to disclose it. That's the law."


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