The NVAR Legal Hotline is a valuable resource available to NVAR members. Designed to provide timely, reliable guidance, it helps you navigate questions that arise as you do business.
Let’s separate fact from fiction for some common issues that arise.
Myth: A Property Owned in a Trust Is Exempt from the Virginia Residential Property Disclosure Act
This is a common misunderstanding.
Fact: Under the Virginia Residential Property Disclosure Act, certain transfers are exempt, including transfers by a fiduciary in the course of administering a decedent’s estate, guardianship, conservatorship, or trust.
However, here’s the important distinction:
If the occupant is also the trustee or a beneficiary of the trust, they are not acting in a fiduciary capacity and the exemption does not apply.
Ownership structure matters, and assumptions about blanket exemptions can create risk. When questions arise about disclosure obligations in trust-owned properties, the Legal Hotline can help clarify the framework.
Myth: A Seller Must Disclose All Known Material Defects to Potential Buyers
Virginia is a “buyer beware” state.
Fact: Under the Virginia Residential Property Disclosure Act, sellers have very limited, specific disclosure requirements. Buyers are expected to perform their own due diligence when determining a property’s condition.
However, this does not mean there are no disclosure responsibilities in a transaction.
Important Distinction for Realtors®:
Under the National Association of REALTORS® (NAR) Code of Ethics, specifically Article 2, Realtors® have an obligation to disclose known adverse material facts.
So, while the statute may limit a seller’s disclosure requirements, the ethical obligations of Realtors® are broader. Understanding the difference between statutory requirements and ethical duties is critical — and the Legal Hotline can help you navigate that distinction.
Myth: Compensation Paid by the Seller to the Buyer’s Broker Cannot Be Changed After Ratification
Another frequent misconception involves compensation and the Code of Ethics.
A common misinterpretation of Article 3, Standard of Practice 3-2 and 3-3, is that once compensation is offered or agreed upon, it is permanently binding.
That is not accurate.
Fact: Nothing in Standard of Practice 3-2 or 3-3 prohibits the parties from negotiating an adjustment to compensation after a contract is ratified. Like many contractual elements, compensation can be modified by mutual agreement of the parties.
Understanding what the Code of Ethics does — and does not — require is essential to avoiding confusion in transactions.
Your Trusted Resource — Included with Your Membership
When in doubt, reach out. Clear guidance today can prevent costly misunderstandings tomorrow.
Submit a question to the Legal Hotline at nvar.com/hotline and hear back in one business day.
