Wednesday, May 15, 2013

Sex Offenders & Disclosure Obligation of Real Estate Agents

While teaching agency disclosure, I was recently questioned about the duty of a seller's agent to disclose to prospective purchaser customers whether a sex offender lived in the subject Condominium.

The agent made inquiry pursuant to Real Property Law 443(4)(a) where the statute requires a seller's agent to "disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law."

The agent's point was that a sex offender's presence would lower the "desirability of property", if not the "value" of the Condominium unit. It was a good point that the agent made and it stumped me. So I said that I would check some law and let everyone know the answer on this blog.

Here goes - The closest case on point is Glazer v. LoPreste. Therein, a home purchaser sued the seller and real estate agents stating that the seller and agents fraudulently misrepresented that the home was a good place to raise children and concealed the existence of sex offenders in the neighborhood. The Appellate Division (2nd highest Court in the State) held (decided) that there was no rightful claim under these circumstances and dismissed the case.

Glazer is differentiated from the facts presented in that Glazer involved allegations of an affirmative misrepresentation whereas the facts presented only involved a failure of a duty to disclose. However, Glazer involved a sex offender in the neighborhood whereas the question presented involved one living within the same Condominium, which appears to be a heightened situation. Nonetheless, it seems safe for a real estate agent not to disclose the existence of a sex offender in this facts presented because, as the Court stated in Glazer, "the information was not 'peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the subject transaction'".

Stated otherwise, the Glazer decision seems to limit the obligations for a real estate agent to disclose to facts that are not generally known nor easily discovered through due care. Meaning, why didn't the purchaser check the sex offender registry for himself?

So, agents, while there is no license law opinion directly on point, it appears that Glazer, while not addressing license law compliance and section 443(4)(a) expressly, would make nondisclosure permissible.