"Buyer is advised to obtain a property inspection by a qualified professional."

That, or one of its many versions, is both good advice and a good risk management tool. Like all good tools, though, it can be misused. The particular occasion of its misuse may be when it is the only thing that is said relative to property condition.

The Code of Ethics of the National Association of Realtors® admonishes its members not to conceal pertinent facts about a property (Article 2). The laws of many states put this in a more affirmative form, requiring that an agent disclose any known material facts. So, if you had knowledge about something negative regarding a property, but all you did was give the advice that the buyer should have an inspection, you would not have fulfilled your duty.

California is a state that takes an agent’s disclosure responsibility a step further. Not only must an agent disclose what he or she knows, but also there is an obligation to do a bit of investigation. California Civil Code section 2079 requires both a buyer’s agent and a seller’s agent "to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to [the] prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal…"

The investigation required is not excessively demanding. Specifically ruled out are areas that are not reasonably and normally accessible, areas off site of the property, public records or permits, and common areas of planned unit developments, condominiums and the like. Also, compliance with the law does not demand expertise in fields such as construction, engineering, or geology. The standard of care is "the degree of care that a reasonably prudent real estate licensee would exercise and is measured by the degree of knowledge … required to obtain a [real estate] license…"

About 3 ½ years ago the California Association of Realtors® (CAR) introduced the Agent Visual Inspection Disclosure (AVID) form, designed to help agents in fulfillment of their inspection duties. It is not a detailed check list like a professional inspector might use. It mostly consists of sections of blank lines where agents may record their findings. The headers of the sections refer to different areas of the property (e.g. kitchen, family room, etc.), and there is plenty of room for "other." The purpose of the form is simply to give agents a place and an occasion to record their observations of any items that might materially affect the value or desirability of the property. Sometimes there is nothing to report of that nature. That is ok. Maybe there is nothing to report about the bedrooms, but there might be a reportable stain on the living room ceiling. The AVID helps to organize those facts.

The AVID is not a legally-mandated form, although many offices now require its use. In many areas its use has evolved into a standard of practice.

There is, though, a legally-required form where an agent is required to record anything noteworthy. That is the Real Estate Transfer Disclosure Statement (TDS). The TDS is primarily a document where the seller provides information to the buyer. But it also calls for comment by both the agent of the buyer and the agent of the seller.

It is on the TDS that countless agents write the advice that the buyer should obtain a professional inspection. This is fine, provided the agent has also included their own observations, or made reference to some other document like the AVID. Unfortunately, many agents only write the advisory statement.

One way to look at things from a risk-management point of view is to ask yourself, "How would this look at trial?"

A plaintiff’s attorney would indeed consider it a gift if a defendant real estate agent had done nothing more in the disclosure area than to advise the buyer to get an inspection. For, in California, if that is all the agent has done, then he or she has left no evidence that they conducted the inspection that the law requires. And how would that look to the judge and/or jury?

Published: September 14, 2010

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Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .