According to the National Association of Realtors® Legal Scan – Legal Issues facing Real Estate Professionals, it is the opinion of Brokers, agents and attorneys that the biggest disputes are and continue to be in disclosure issues involving short sales.
The disputes center around the issue of property disclosures, the disclosure of known material defects to a property in short sale. Brokers and agents are sometimes not disclosing material defects.
Disputes also involve dual agency in those states that have dual agency. Florida is not a dual agency state. The other complaint is about agents breaching their fiduciary duty. Again, in Florida it is presumed that brokers are acting as transaction brokers unless a single agency agreement has been entered into.
Because short sales are sold in “as is” condition, sellers and agents are not providing sellers’ property disclosures and many who are – have property disclosures that are weak and lack quality. Of course, if the property has never been lived in by the owner of the property and that owner does not live in Florida they would not necessarily have knowledge of defects depending on who was handling their property.
We really encourage buyers agent to strongly suggest to their buyers to have a home inspection completed within the first 20 days of their offer being accepted by the seller, before the bank approves a short sale. This way, the buyer can move to look for another property should the inspection report come back with repairs the buyer is not willing to accept.
In the legal scan report it also states that there is a disclosure problem with agents not disclosing that the listing is a short sale or soon will be a short sale. This is a whole other topic because this dispute has two sides to it. It has an agent who has a duty to disclose material defects and it can be argued that a short sale is NOT a material defect to the property. It can also be argued that a seller who may get fired by his employer for doing a short sale needs to keep this information private and that by making his short sale situation known to the world especially online can damage him which then is another dispute about confidentiality of his financial condition. We can argue these points all day long.