RACI Newsletter

Case Study, Article 2 Deceptive Information in MLS Compilations.

Published on Jul 05, 2010

Article 2 reads: REALTORS shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agencyor non-agency relationships as defined by state law.  

CASE: REALTOR R searched the MLS compilation of current listings on behalf of his client, Dr. Z, who had recently completed his residency and was returning home to take a position on the staff of the of the community hospital. REALTORS R's search returned several listings that satisfied Dr. Z's requirements, including a two-story residence listed with REALTOR B that showed, in the "Remarks" section of the property data form, "Pay your mortgage with rent from the apartment upstairs."

REALTOR R attached the listings he'd identified to an e-mail message that he sent to Dr. Z. A day later, REALTOR R received a call from Dr. Z who told him there was something about REALTOR B's listing that struck him as odd. "That house is in the neighborhood I grew up in" said Dr. Z, "I also remember our neighbors having a problem with the Building Department when they added a kitchen on the second floor so their grandmother could have her own apartment."

REALTOR R assured Dr. Z that he would make the necessary inquiries and get back to him promptly. His call to the Building Department confirmed Dr. Z's suspicion that the home was zoned single family.

Feeling embarrassed and misled by REALTOR B's apparent misrepresentation, REALTOR R filed a complaint with the local association of REALTORS alleging misrepresentation on the part of REALTOR B for publishing inaccurate information in the MLS.

At the hearing convened to consider REALTOR R complaint, REALTOR B ackowledged the seller had told him that the conversion had been made to code but without the necessary permits, and the apartment had never been rented. "I assumed the new owners could get a variance from the Building Department," he said.

What is your opinion? How did the hearing panel rule?

Answer: The Hearing Panel did not agree with REALTOR B's defense or rationale and concluded that showing a single family home as having income-producing potential from an upstairs apartment which had never been rented was a misrepresentation that violated Article 2.