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Realtors Face Disclosure Requirements After Maryland Landslide

Updated on June 12, 2015

Realtor Disclosure Requirements Are Extensive

Fort Washington, Maryland, residents whose neighborhood was damaged by a landslide in 2014 sued Prince George’s County in a complex legal dispute that touches on a realtor’s duty to disclose property defects.

After the landslide, county officials wanted to condemn five homes and spend $15 million to shore up the hillside where mud, clay and trees slid into a street after heavy rainfall.

Three of the five homeowners whose property would be condemned did not want to move. They said Prince George’s County offered too little compensation for their property. They also said the county should pay additional compensation for its negligence in not preventing the landslide.

The dispute presents the Prince George’s County Circuit Court with a difficult balancing act to determine when an act of nature becomes a preventable accident.

It also means real estate agents might have additional disclosure responsibilities for any properties they sell in the area if the property continued to create landslide risks for owners.

Realtors are required by law and regulations to disclose any property defects and or other information that might influence a buyer’s decision on whether to purchase a property.

Normally, the information that must be disclosed includes whether the seller will accept lower offers, whether a broker has an interest in the property, personal relationships with the seller, property valuation and similar financial data.

If, however, there are non-obvious defects to property, such as unstable soil or rock conditions, the disclosure duties of realtors are more murky.

If the realtors know or could discover with reasonable effort the unstable soil conditions, they must disclose the defects or face liability. If the defects are difficult to discover, realtors normally can avoid liability.

If courts or the local real estate commission believe realtors violated their full disclosure requirements, the party that suffered damages could sue. For example, a seller could recover compensation for the loss of projected profits if a realtor fails to disclose relevant information, such as a soil slippage or landslide risk.

If the plaintiffs can show realtors demonstrated malicious intent in failing to disclose, they also could recover potentially large amounts of money from punitive damages.

In the Fort Washington case, a circuit court judge ordered the county and angry residents to try to mediate the dispute to try to circumvent the need for lawsuits.

Landowners — in this case Prince George’s County — are normally liable when hazards on their property that they could know about with a reasonable inspection damage the property of adjacent residents.

Prince George’s County officials say the May 5, 2014 landslide was an act of nature, not their fault. They also say they did not know there was a landslide hazard.

The residents say cracks in the roadbed and occasional water main breaks in the area for years should have given the county notice that maintenance was needed to prevent soil slippage. The residents hired an engineering firm that used public records, photographs and geological reports to show the hillside collapse was caused by leaking water pipes under a roadway.

The engineering report also said the county could repair the neighborhood for far less than its proposed $15 million budget. County officials plan to drive large steel beams into the hillside to stabilize the soil.

The county has responded to lawsuit threats by filing for an injunction to evict the three holdout residents, perhaps with no compensation for their homes.

Maryland landslide in 2014 damages nearby homes.
Maryland landslide in 2014 damages nearby homes.

How extensive are a realtor's disclosure requirements?

Should realtors face liability if they fail to disclose unstable soil conditions to property buyers?

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