Should listing agents review inspection reports received from buyers?
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.
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