Frequently Asked Questions

Legal Hotline FAQ

A blog of the most frequently asked questions to the Maryland REALTORS Legal Hotline.

Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

What is the difference between a latent defect and a material fact? Who must disclose what?

A seller is required to disclose the existence of known latent defects. Latent defects are defined as material defects in real property or an improvement to real property that: (a) a buyer would not reasonably be expected to ascertain or observe by a careful visual inspection of the property; and (b) would pose a direct threat to the health or safety of the buyer or an invitee or occupant of the buyer.
A real estate licensee in Maryland is required to disclose material facts the licensee knew or should have known that relates to the property.  A material fact is defined as anything that would affect 1) the value of the property or 2) a buyer/tenant’s decision to purchase/lease the property or how much to offer to purchase or lease the property. 
Section 17-322(b)(4) of the Maryland Real Estate Brokers Act provides that it is the obligation of a real estate licensee to ascertain and disclose all material facts to all parties of which the licensee has actual knowledge or those which the licensee should have known that relate to the property.  Additionally, the Maryland Code of Ethics requires that licensees make a reasonable effort to ascertain all material facts concerning every property for which the licensee accepts the agency in order to fulfill the obligation to avoid error, exaggeration, misrepresentation, or concealment of material facts. A real estate licensee may be held accountable if he knew or should have known of a condition and failed to disclose it.
With regard to material facts, they may be included as an attachment to the disclosure and disclaimer statement. We highly recommend that you disclose any material facts in writing.
Finally, under the law, the material fact disclosure must be provided to buyers prior to the time a buyer submits an offer. When you disclose, you put the buyer on notice to make a further investigation. You also minimize your own liability and that of your seller.

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