It used to be that buying a home was a great adventure: Purchasers were never quite sure what they were getting because the rule of the day was "buyer beware."

But in the past decade there's been a radical change in the marketplace. Professional home inspections are entirely common, buyer brokers represent purchasers, and seller disclosure statements created by state governments are used universally. And yet, despite such advances, the question of what is disclosed or should be disclosed is sometimes fuzzy.

For instance, consider the matter of "stigmatized" houses. These homes are physically fine but not for everyone -- for example, properties which have been the site of a suicide or murder. Must the owner tell? What if the event happened many years ago? How much time is enough? The rules vary by state.

Consumers today want to know about the physical condition of a home and much more. For instance, which broker represents which party in a transaction. Is the broker representing the buyer or the seller, both parties as a dual agent, or is the broker a facilitator trying to bring buyer and seller together?

In the usual case, disclosure is covered generally in real estate education classes. But now the state of Arizona is trying something new, classes now for the state's 700 approved real estate instructors devoted entirely to the matter of disclosure -- and later this year a new disclosure education requirement for all real estate licensees.

"Disclosure of all sorts of information about real property offered for sale is becoming an increasingly complex matter," says Arizona Real Estate Commissioner Jerry Holt. "According to legal experts, 70 to 80 percent of all real estate law suits are filed by buyers, and nearly all of these suits address disclosure matters."

"Even though some important aspects of disclosure law are usually covered in other core required courses, like agency and contract law, under the present continuing education requirements a licensee can go a whole career without the mega dose of exposure to disclosure law the subject merits," says Edwin J. Ricketts, Arizona's Deputy Commissioner of Real Estate from 1991 to 1997.

As well, Ricketts says "then, as now, it occurred to me that most licensee law violations were in the area of disclosure, whether it was property defects, agency related, secret compensation, a licensee's interest in the deal as a principal, etc. Obviously, licensee education in the area of disclosure law is beyond merely important -- it's essential to the public interest."

"I spend my days defending brokers," says Robert N. Bass, a Phoenix-based attorney who specializes in real estate litigation, risk reduction, and education, "and time after time I see the same kinds of mistakes being made by the licensees."

Bass said he has been surprised by the response to the all-disclosure class.

"Arizona's Real Estate Commissioner took a bit of a risk by implementing a new rule requiring that all licensees attend a three-hour course on disclosure," says Bass. "I was expecting some resistance from the brokerage community, but every broker I've talked to thinks it is a great idea. The AZ Association of Realtors was heavily involved in developing the program, and the industry seems squarely behind it."

The instructor development workshop will address such topics as a broker's obligation to investigate, verify and discover. In essence, what is the duty a real estate licensee to interpret a property disclosure statement, check zoning, or assure that the home really has a connection to public sewer lines?

Ricketts says the Arizona effort is unique.

"To my knowledge, no other state has recognized the coming of age, so to speak, of disclosure law as a concentrated academic and practitioner issue. And I'm certainly not aware of any other state mandating a disclosure law continuing education course."

Beginning July 1, 2002, Arizona real estate licenses must take a new three-hour continuing education disclosure course. Classes are expected to be available from most real estate schools in the state.

No less interesting, if the Arizona program is a success -- if claims against real estate licensees tend to fall -- then similar disclosure courses are likely to emerge in other states.

"If other states are able to develop a disclosure course of this caliber, it will take the practice of real estate to a higher level," says Bass, who lectures before industry groups nationwide. "At a time when many are questioning the continuing value of real estate agents, I think the long-term effect off this kind of program will be to improve the public's perception of this industry."

The Arizona Real Estate Educators Association (AZ REEA) is coordinating the instructor workshops. Attendees will be awarded three hours of Commissioner's Rules and three hours of Real Estate Legal Issues. Registration is $40 per attendee, and 260 pages of material will be distributed.

The instructor panel members are all real estate lawyers: Michelle Lind, James Eckley, Dan Kloberdanz and Richard Mack.

The first course was taught March 1st and a second session is set for April 5th. Other sessions may also be held. For details, contact Ricketts, the 2002 AZ REEA president, by e-mail or call: 602-277-4332.

For more articles by Peter G. Miller, please press here.

Published: March 5, 2002

Use of this article without permission is a violation of federal copyright laws.