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Weekly Q&As

Should listing agents review inspection reports received from buyers?

Release Date: 11/09/2017

QUESTION: A buyer recently terminated a contract on one of my listings. In the email containing the termination, the buyer also included a copy of his inspection report. Another agent in my firm told me not to look at the inspection report at all. Am I allowed to do that? What will happen if I don’t?

ANSWER: Even thought the license law and the REALTOR® Code of Ethics do not have a specific requirement mandating that you look at a buyer’s inspection report, we believe the best course of action is to review the report.

The North Carolina Real Estate Commission has said that both listing and selling agents have a duty to discover and disclose material facts when “red flags” come to the agent’s attention, i.e., when the agent reasonably should know that a material fact exists. We understand that sometimes brokers share inspection reports as a matter of course, and that the mere receipt of an inspection report does not mean that a material fact is contained therein. Nevertheless, if a broker receives a copy of an inspection report, particularly if the report is offered in connection with a termination, we believe that the agent should strongly consider whether the report is being offered as a “red flag” to the listing agent.

An agent deciding not to investigate information given to them about a property may be opening himself or herself to a charge of negligent, or even willful, concealment of a material fact. Either charge could expose the agent and their firm to both ethics violations and civil liability.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.