A condominium was listed for sale on the multiple listing service (“MLS”). The listing shows the seller will accept Conventional financing or cash offers.
Ultimately, the buyer’s lender discovers that a conventional loan cannot be approved for the condominium, because too many of the units are owned by one owner.
The buyer ultimately pays cash and the transaction closes.
One month later, the buyer’s agent sees another condominium listed on the MLS by the same agent accepting conventional financing.
Does the listing agent have a duty to disclose that the condominium cannot qualify for conventional financing?
Pursuant to the Arizona Administrative Code R4-28-1101, an agent must disclose all known material facts regarding a property. Additionally, R4-28-502(C) states that “A salesperson or broker shall ensure that all advertising contains accurate claims and representations, and fully states factual material relating to the information advertised. A salesperson or broker shall not misrepresent the facts or create misleading impressions.”
However, the buyer’s agent shouldn’t assume that all conventional loans are prohibited on this property.
Therefore, as a best business practice, the listing agent should disclose that the condominium may not qualify for all conventional loans, and that the buyer should investigate their financing options during the inspection period.