A material fact is ANY fact that could affect a reasonable person’s decision to buy, sell, or lease real property. All brokers have a duty to discover and disclose material facts, as established by North Carolina General Statute section 93A-6(a)(1) and by Commission Rule 58A .0114(c). Failure to disclose material facts continues to be the most common complaint from consumers.
How do I disclose material facts? The legal requirements do not specify a method for disclosing. However, a prudent broker would disclose in writing and retain such written disclosure with other transaction documents for three years.
Many listing agents disclose material facts within their listings in a Multiple Listing Service (MLS). However, this can be problematic when the material facts are contained in an area exclusively for brokers called “agent only.” An unrepresented buyer, or a buyer represented by a broker who is not a member of the listing agent’s MLS, cannot access these material fact disclosures. In this situation, the listing agent has not disclosed material facts to that buyer. The same is true for tenants. One best practice would be to disclose material facts via email, as that would ensure receipt and create an online paper trail.
When do I disclose material facts? A broker must disclose material facts in a timely manner, i.e., in enough time for the disclosure to be meaningful in connection with the consumer’s decision-making. If a material fact is known prior to contract formation, then the broker must disclose the material fact prior to contract formation. If a material fact is discovered after contract formation, then the broker must disclose the material fact immediately. The broker cannot decide to wait for a party to ask about the material fact or refrain from disclosing the material fact to any party because they believe that the material fact was common knowledge.
To whom do I disclose material facts? The disclosure of material facts is mandatory and must be volunteered freely to all parties in a transaction without regard to whom the broker represents. This includes buyers, sellers, landlords, and tenants.