Level of disclosure required when listing a property with mold remediation
Posted on Tuesday, August 12th, 2008 at 10:54 pm.We asked to Blake, VAR's associate counsel, a question about mold remediation work we had done for a bank-owned listing of ours:
We are listing a bank foreclosure property on which mold remediation work was completed. We have disclosed our knowledge of mold and the remediation steps which were taken to all agents who inquired about the property. We now have a ratified contract and the selling agent is requesting our mold remediation report which we had declined, citing the bank protocol which is that we are not to send out any inspection reports or work invoices/estimates to external agents outside of our firm and outside of the bank. How far reaching is our responsibility of disclosure - are we required to provide the report to the selling agent or is our current level of disclosure enough? Also, since this is a bank foreclosure are they exempt from disclosure. Also, the buyers have signed a water damage, toxic mold and environmental indemnification agreement.
And he wrote back:
You indicated below that the mold remediation is complete. If it was done satisfactorily you don't have to disclose it. The law doesn't require listing agents to dislcose repair history, only current material adverse facts pertaining to the physcial condition of the property.
FYI, if you do have a disclosure obligation you don't have to provide reports - reports are proprietary and there is no requirement that you provide them.
Lenders who take property back in foreclosure are exempt from the obligation to give a disclosure statement. Section 55-518(2) exempts “transfers by a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a foreclosure sale under a deed of trust or has acquired the real property by a deed in lieu of foreclosure.” This makes sense. The lender would have no better knowledge of the property than the trustee in foreclosure would, but even if it did, buyers of REO typically understand they’re buying what the lender has.
FYI, no seller in Virginia is obligated to make disclosures about property condition, except as to lead paint and as required by the Residential Property Disclosure Act (in this case, you are exempt).
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