Dear Shannon: Ethics Complaint Based on Iffy Info?

Can guessing lead to an ethics complaint if a buyer later finds out it’s wrong and makes a formal complaint? I thought a nearby development might be a new mall but it was actually a manufacturing plant.

ORLANDO, Fla. – Dear Shannon: I’m a homebuilder and I showed one of my new houses to a buyer. The buyer then asked me about nearby construction and its future use. I said, “I really don’t know, but I think it’s the beautiful new mall proposed for this area.”

After closing, the buyer found out it was not a beautiful new mall – it was a manufacturing plant. The buyer says they never would have purchased the property had they known that a manufacturing plant was going to be built so close. Now the buyer filed an ethics complaint against me claiming that I failed to determine a pertinent fact.

I gave an honest answer to the buyer. I didn’t know what was being built at the time. I did know that other builders were planning on building a large mall somewhere in the area. I was just trying to be helpful, so, I guessed.

I told the buyer upfront that I didn’t know, so doesn’t this cover me? – Guessing

Dear Guessing: Okay, so I really like your impulse to be helpful. It’s probably one of the characteristics that makes you an outstanding Realtor®. However, that’s not really how this works. Telling the buyer you don’t know doesn’t provide protection for you when the next thing you say is an incorrect speculation about a pertinent fact that you probably should have clarified before sharing.

It’s okay to say, “I don’t know.” However, if you follow that up with an incorrect guess, then this could be an issue under Article 2 of the Code of Ethics.

Article 2 states: Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.

In this case, the buyer had a question about construction nearby. This question concerned a pertinent fact relating to the property or transaction. Your competence in the real estate industry required you to know the answer or, if you didn’t know the answer, you probably should have considered telling the buyer you would to try to get the answer. (see Case Interpretation #2-7: Obligation to Determine Pertinent Facts) Remember: Always be the source of the source of information.

You started with, “I don’t know,” but then went on to tell the buyer a guess. The buyer was reasonable in relying on your answer, which unfortunately turned out to be incorrect. This was obviously a big deal to the buyer and it is a potential issue under Article 2.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Advice deemed accurate on date of publication

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