Stephen L. Fussell, Chief Consumer Protection Officer
Ignorance is a lack of knowledge. Intentional ignorance is when you choose to avoid learning information or skills. Why would a broker choose to avoid learning information or skills? One reason is that some brokers mistakenly believe that if they don’t know a material fact then they can’t be required to disclose it.
Here are almost a dozen examples of intentional ignorance which could lead to damage to a client and disciplinary action being taken against a broker: i
- A commercial listing broker lists a large tract of land and subsequently hears a rumor regarding a former unregulated dump site on the property, but fails to make any inquiry into the possible former dump site.
- A residential property manager has been leasing a property to the same tenant for five years, but has not inspected the property since the tenant moved in and therefore doesn’t know about the condition of the property or whether the tenant is complying with the terms of the lease, such as unauthorized occupants or pets.
- A vacation rental manager learns of a beach renourishment project but doesn’t inquire about planned dates or potential impact on guests.
- A residential buyer agent shows a house to a buyer-client and silently doubts the accuracy of the square footage advertised in the MLS, but says nothing to anyone, because the buyer instantly fell in love with the property.
- A commercial broker representing a tenant, who wants to lease a space for a daycare center, fails to ascertain whether the space meets the requirements for operating a daycare center or to advise their client to do so.
- A property manager notices rust-colored stains in sinks, toilets and tubs, but fails to inquire about water quality or water filtration systems or suggest that the owner test the water quality.
- A residential listing agent, whose market area includes a town bordering a river that floods during periods of heavy rain, does not inquire about flooding on the listed property or in the surrounding neighborhood.
- A group of brokers buy an investment property to renovate and resell, but do not order any inspections or discuss conditions with contractors thinking that, if they do not discover material facts about the property, then they will not have to disclose them on resale.
- A residential listing agent lists a house with a septic system, but does not pull and review the septic permit or inquire about the pool of foul-smelling water standing in the yard.
- A residential buyer agent knows their buyer-client wants to construct a barn and raise chickens, goats and other farm animals, but fails to obtain and review the restrictive covenants, zoning restrictions and other regulations that may affect the buyer’s intended use or to advise their client to do so.
- A buyer agent has a client they know to have respiratory issues and notices standing water in the crawl space of a property, but does not inquire about mold or suggest that the buyer hire a mold inspector.
examples illustrate brokers who chose to avoid acquiring information to improve
their knowledge and/or skills and thereby failed to position themselves to better
represent their clients and protect consumers.
The flaw in using
intentional ignorance as a strategy is that a broker is required to discover
and disclose material facts. This duty to discover eliminates a broker’s option
to avoid learning about a material fact. Moreover, a broker is held responsible
for what he/she knows or reasonably should know. This responsibility also
applies when a broker is selling or leasing his/her own property (see N.C.G.S.
§ 93A-6(b)(3)). So, even if a broker doesn’t know a material fact, if the
Commission determines that a prudent agent would know it, then the ignorant
agent can be disciplined for failing to disclose the fact.
N.C.G.S. § 93A-6(a)(1),
(8) and (10) authorize the Commission to pursue disciplinary action against a
broker who omits a material fact, is incompetent or unworthy to act in a manner
which protects the public or who engages in improper or dishonest dealing,
respectively. Therefore, intentional
ignorance is not an option for a broker. Every broker must exercise reasonable
care and diligence in discovering and disclosing all material facts to all
interested persons in a timely manner.