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Posts Tagged ‘single agent’

Caveat Emptor- Buyers Beware!

Caveat Emptor
Caveat Emptor, “Let the buyer beware.” is a real estate principle that warns buyers to “beware” and do their due diligence. It is of paramount importance, for Florida real estate buyers, since the majority of real estate agents are transactional agents.  When a purchase contract for property says the buyer is to take the property “as is,” the seller truly means “as is.” Under the doctrine of caveat emptor, property buyers are held responsible for inspecting the quality and condition of the land or building before the final execution of the purchase contract.
If the buyer does not exercise due diligence during the Inspection Contingency Period and fails to examine the property, then the seller is shielded from liability for any defects. Additionally, the burden of proof is on the buyer to show that the seller actively concealed a material defect.
Florida courts continue to adhere to caveat emptor, which was reaffirmed in the Florida Fourth District Court of Appeals decision for Florida Holding 4800, LLC v. Lauderhill Mall Investment.There are three exceptions to the caveat emptor doctrine in Florida, including (1) where the purchaser has been prevented from making an independent inspection of the property due to a trick or artifice, (2) where the purchaser does not have an equal opportunity to become apprised of the fact, and (3) where one of the parties attempts to disclose facts and fails to reveal the whole truth. Nonetheless, these exceptions are difficult to claim in court because the buyer has the burden of proving that the seller actively hid the material fact to sidestep any “as-is” language of a contract.   Additionally, oral representations by the seller regarding the property’s condition are explicitly contradicted by any “as is” language in the written agreement. This notion rests on the buyer’s inherent ability to inspect the property and withdraw from the property agreement if the quality of the land or building does not meet their expectations.
There are two forms of representation available under a Broker license held by a real estate professional according to Florida law: the Single Agent and the Transaction Broker. These two relationships entitle the buyer or seller to different upheld duties by the real estate professional.  Full disclosure applies exclusively to single agent brokers. Limited confidentiality is a transaction broker duty.
A Single Agent is defined by Florida Statutes Chapter 475, Part I as a broker who represents either the buyer or seller of real estate, but not in the same transaction. It is the highest form, providing the most confidence to the customer that the Realtor represents only the customer’s interest. In the case of an Exclusive Buyer Agent the buyer is their CLIENT and the single agent owes the buyer a fiduciary duty.
The duties of a single agent that must be fully described and disclosed in writing to a buyer or seller in agreements for representation include the following:
  • Dealing honestly and fairly
  • Loyalty
  • Confidentiality
  • Obedience
  • Full disclosure
  • Accounting for all funds
  • Skill, care, and diligence in the transaction
  • Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing
  • Disclosing all known facts that materially affect the value of residential real property and are not readily observable
Disclosure of these duties must be made before or during entrance into a listing/representation agreement, or before the showing of property.
A transactional agent is defined as a real estate agent who provides limited representation to a buyer, a seller or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent.
Section 475.278(1)(b), Florida Statutes, presumes that a licensee is operating as a transaction broker, unless the customer and broker establish a single agent or no brokerage relationship, in writing.
Most U.S. states now require a Sellers Disclosure Form, often called “disclosure notices,” “property disclosures,” or “property condition statements.” On these forms, sellers must advise the potential buyer of any material defect they’re aware of in the home — usually within a few days of finalizing the purchase agreement or sales contract. Filling out this form is NOT a legal requirement in Florida and many real estate transactional brokerages are taking the position that they are not going to provide a written disclosure from the Seller.
Before deciding to finalize a Contract for Sale the Buyer is provided with an Inspection Contingency Period. You are advised to include some of all the following in your due diligence.
·      Conducting professional inspections of the building and its systems. This could include roof inspections, electrical inspections, HVAC inspections, WDO Inspections, and more.
·      Reviewing the property’s records, including its past owners, title, deed, property survey,  and other important documents. Make sure to look for past code violations, too.
·      Having the property’s value professionally appraised. Your lender might require this anyway if you’re financing the property.
·      Reviewing the property’s compliance with local zoning and land-use regulations.
·      Having an environmental assessment conducted on the lot and the building.  Are there hazardous materials in the building, like lead-based paints? You’ll also want to know if the property is in a flood zone.
·      If you plan to renovate the property you’re buying, bringing in a contractor or consultant is also a smart move. You’ll want to assess the property’s condition as well as the potential repair costs and structural feasibility of the project.
As a home buyer in Florida, you should only seek out an Exclusive Buyer Agent. They owe you a fiduciary duty and are charged with full disclosure of all known facts regarding the property, community and hold your interest in strict confidence. They will work for you to get all the answers you need to make a valid and informed purchase decision.