Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico

Disclosure in Real
Estate
6 Education Credit Hours

Lou Tulga CCIM CRB
February 2012
www.loutulga.com

Copyright 2012 Lou Tulga CCIM CRB
All Rights Reserved 1

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


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. ____________________________________


Significance of ―Material Fact‖

Black’s Law Dictionary Definition

Real Estate Broker’s Paraphrase

Material Facts about What?


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


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. ________________________________

Sources of Potential Liability
Statute Liability
 Federal
 State
 Local
Common Law
 Contract
 Agency
 Tort


Failure to Disclose

Actual Damages

Possible Punitive Damages

Possible Criminal Charges

Rescission where Damages Insufficient


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 cheatLou Tulga CCIM CRB (Black’s Law Dictionary)
Copyright 2012 another‖

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‖


Disclosure and red flags

Disclosure and stigmatized property

Disclosure and fair housing: properties,not
people

Disclosure and consumer consent


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


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."


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)


New Mexico Case Law

Neff v Bud Lewis (1976)

Amato v Rathbun (1982)

Gouveia v City Corp (1984)


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


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.

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.


Superfund Responsible Parties

Strict Liability

 Current owner and operator of the site

 Party who generated the contamination

 Party who transported the contamination


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

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:

Exemptions
The site of a natural death;
The site of a homicide, suicide, assault, sexual assault
or any other crime punishable as a felony; or
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


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


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.

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.

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;

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.


RANM Cover Page Disclosures

Listing Cover Page

Buyer’s Broker Agreement Cover Page

Purchase Agreement Cover Page


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

loutulga@gmail.com www.loutulga.com

Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico

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Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico