BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Q: I am a Seller’s Agent and before we put the property on the market the Seller has contractors and painters doing some repairs, upgrades and improvements to enhance the appeal of their home. I’ve gotten different opinions on when I should conduct my inspection of the property to complete my AVID. Some agents say to do it now and others say wait until the work is completed. What is the right answer?
A: This is an issue that comes up quite frequently. Often, homes are prepared for market including painting, carpeting, and other aesthetic improvements. In some instances, significant construction may be undertaken to improve the property and its value. Staging furniture may be added.
The answer to your question is that with a property being prepped for sale, a Seller’s Agent should inspect the property several times at various stages starting with the original condition of the property through the prepping, improvement and staging phases; and again when all of that work has been completed.
TRUE STORY: In one instance, we had a client who retained a contractor to paint a family room. In her written instructions to the contractor, she advised the contractor to paint over a stain. Several months later, she did her visual inspection and completed her agent visual inspection disclosure (AVID). Because several months went by and the property had been painted, she forgot about painting over the stain. The stain was not disclosed. After the buyer purchased the property. They endured a significant water leak and when they went to repair it, they found significant dry rot and fungus in the wall where the previous stain had occurred. They contacted the painting contractor, who provided them with a copy of the agent’s instructions and specifically, the note she had written advising the painting contractor to paint over the stain. The buyers argued that the agent’s failure to disclose constituted fraud since she instructed the painter to paint over the water stain and she did not disclose it.
While the agent certainly had no intention of committing fraud and simply forgot, nonetheless the brokerage and the agent paid to settle that claim.
For more information on this topic see Weekly Practice Tip “Handling the
Agent Visual Inspection Disclosure (AVID) – The Right Way?
PRACTICE TIPS:
- If significant changes or improvements are going be made to the property by Seller in preparation for sale, agents should visually inspect the property and document the original condition of the property especially including any defects or conditions which materially affect the value or desirability of the property.
- Agents should then keep ongoing documentation regarding improvements and changes to the original conditions to ensure buyers are fully aware of the changes and improvements from the original condition. Such documentation can be in the form of notes, photographs, or videos.
- Agents can prepare their AVID anytime, so long as it is timely provided to the buyer and includes documentation regarding all staging, prep work and improvements to the property undertaken in preparing the property for marketing, including the current property condition as it is ready to come on the market.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.