A listing agent called about a sensitive problem with one of her listings that is currently under contract. The buyer's agent has notified her that the buyers learned from the neighbors that the seller's son committed suicide in the property a few years before. Now the buyers are angry because they believe the listing agent and seller deliberately "concealed" this pertinent fact from the buyers.
The buyers insist that the listing agent should have known this information and disclosed it to the buyers before contract ratification. Now the buyers want to be released from the contract and want to sue everyone for damages. The listing agent talked to her clients and confirmed that the seller's son did commit suicide in the property a few years ago.
The listing agent wants to know if she was obligated to disclose this information and if she is going to get into any trouble because she did not know about the suicide?
Article 2 of the Code of Ethics and Standards of Practice does prohibit REALTORS® from exaggerating, misrepresenting or concealing pertinent facts relating to the property or the transaction. Please note that this standard usually requires REALTORS® to go beyond their normal, legal obligation to disclose "É all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee" (Code of Virginia ¤ 54.1-2131. Licensees engaged by sellers).
However, Standard of Practice 2-5 states that "Factors defined as 'non-material' by law or regulation or which are expressly referenced in law or regulation as not being subject to disclosure are considered not 'pertinent' for the purposes of Article 2." This limits the scope of Article 2 by exempting any factors that are defined as non-material by law or state regulation. The Virginia Association of REALTORS®(VAR) 2002 Ethics Training Guide states the following: "Virginia's Seller Disclosure law defines stigmatizing events (such as ghost, murders, etc.) that had no material effect on the property as non-material. Standard of Practice 2-5, combined with this disclosure law, releases Virginia's REALTORS® from the obligation of disclosing stigmatizing events."
Therefore, based on this prevailing interpretation on Article 2 and Standard of Practice 2-5, the Listing Agent was not under any obligation to disclose information about the suicide that occurred on the property. However, I have to warn REALTORS® that many buyers do not like this answer and become very upset when they learn that agents do not have to disclose the fact that a person committed suicide in a house.