To Disclose or Not to Disclose, That is Not the Question

I recently read a column in our Hawaii Association of Realtors newspaper talking about calls they receive on the legal hotline.  The focus of the article was about whether you should disclose or not certain facts.

First let me disclose that I am not an attorney and as such will not give out any legal advice.  What advice I will give is a bit of old fashioned common sense.

To start with in Hawaii our State Law requires that seller's of residential property disclose all material facts. A material fact is basically anything that might affect the buyer's decision to purchase.  Chapter 508D, Hawaii Revised Statutes defines a material fact as: "any defect or condition that is past or present that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale".  The exception would be that our state law forbids the disclosure of whether or not the person or persons inhabiting the property have Aids or HIV.  It is also not required that you disclose the existence of ghosts. (I know that will start a few side discussions for sure).

This is how I explain it to my clients.  In Hawaii there is no such thing as "Buyer Beware."  The buyer of residential property is a protected class of citizen.  If the seller's or either agent knows a material fact about the property they need to disclose it.

I had sold a property not long ago where there was a suicide a couple of owners ago.  We were in escrow and a neighbor came up to me and asked, are you selling the townhouse that the guy killed himself in?  Ooops, that is something we may need to disclose.  I met with my client and went through her papers from when she bought the place and there it was.  The previous owner disclosed the death to her.  My client's response was; "I kind of remember something like that, but it didn't matter to me."  I immediately contacted the buyer's agent and we presented them with an amended seller's disclosure.  Their client didn't care either and we completed the sale.

Now I have never sold a home with ghosts, but if I ever do.....  I will recommend that my client disclose, even if the law does not require it.  Once you disclose and the other side accepts you disclosure, it is off the table.

I have found only one way to address material facts: Disclose, document and get all needed signatures.

If you have to ask then you need to do one of the three things listed above.

In Hawaii we as agents are not allowed to fill out the seller's disclosure for our clients, but we can go over it with them.

• Agent:  Mr. Seller didn't you tell me you have a broken water pipe last month, the roof was repaired and there was some mold in the bathrooms?
• Seller:  That may scare away buyers.
• Agent: You need to disclose it.
• Seller: I do not want to disclose that, it will negatively affect the sale of my home.
• Agent: Mr. Seller you and I are required by law to disclose all material facts.
• Seller:  Mr. Realtor, you are supposed to represent me and I do not want that information let out under any condition.
• Agent: Mr. Seller please put down you pen.  I can not take this listing from you.  Thank you for your time.

If I have a potential client who does not intend to disclose material facts I will not take the listing.  If I have the listing and later find the client is trying to hide material facts and orders me not to disclose.  It is time to seek legal advice.

One of my most commonly used phrases when it comes to disclosures is "The Truth Will Set You Free."