Disclosure Of Fact That Buyer Is Under Contract

QUESTION: If a buyer is under contract with a seller using the Offer to Purchase and Contract (Form 2-T), and then wants to make another offer on a different property owned by a different seller that is listed with a different firm, is the fact that the buyer is already under contract with the first seller a material fact that must be disclosed by the buyer’s agent to the listing agent for the second seller?

ANSWER: We think the answer to the question is probably “no.” The Real Estate Commission has defined “material facts” to include facts relating directly to the ability of the agent’s principal to complete the transaction. In the situation you describe, since Form 2-T limits the seller’s damages to the amount of the due diligence fee and earnest money deposit, that’s the most the buyer would stand to lose if they fail to perform that contract. If the loss of that amount would not affect the buyer’s financial ability to close on a second contract, the existence of the contract with the first seller would not affect the ability of the buyer to complete a transaction with the second seller. Thus, the existence of the first contract would not be a material fact that the buyer’s agent would be obliged to disclose.

Having said the foregoing, there is no reason why a listing agent could not simply ask a buyer agent presenting an offer if the buyer agent’s client is already under contract to purchase other property. The buyer’s agent is not obligated to answer the question, but he or she may not give a misleading answer. If the answer to the question is something like “I cannot/will not answer that question,” it may be an indication that the buyer is already under contract, and the listing agent and seller could take that into account in determining whether or under what terms the seller might be willing to enter into a contract with the buyer.

© Copyright 2012 - 2024. 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.

Filed Under: Disclosure,