lou tulga ccim crb disclosure in real estate in new mexico
DESCRIPTION
Supporting PowerPoint slides for the Commission Approved 6 Education CE Credit Hours in New MexicoLou Tulga CCIM CRBTRANSCRIPT
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1
Disclosure in Real Estate
6 Education Credit Hours
Lou Tulga CCIM CRB
February 2012
www.loutulga.com
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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
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When NOT to Disclose
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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. ____________________________________
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Significance of “Material Fact”
Black’s Law Dictionary Definition
Real Estate Broker’s Paraphrase
Material Facts about What?
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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
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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. ________________________________
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Sources of Potential Liability
Statute Liability Federal State Local
Common Law Contract Agency Tort
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Failure to Disclose
Actual Damages
Possible Punitive Damages
Possible Criminal Charges
Rescission where Damages Insufficient
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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)
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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”
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Disclosure and Common Sense
Disclosure and red flags
Disclosure and stigmatized property
Disclosure and fair housing: properties,not people
Disclosure and consumer consent
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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
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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."
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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)
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New Mexico Case Law
Neff v Bud Lewis (1976)
Amato v Rathbun (1982)
Gouveia v City Corp (1984)
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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
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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.
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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.
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Superfund Responsible Parties
Strict Liability
Current owner and operator of the site
Party who generated the contamination
Party who transported the contamination
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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
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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:
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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
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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
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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.
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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.
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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;
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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.
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RANM Cover Page Disclosures
Listing Cover Page
Buyer’s Broker Agreement Cover Page
Purchase Agreement Cover Page
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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