Real Estate Disclosure Mistakes: Why Agents Should Never Answer for Their Clients
Real estate disclosure mistakes are one of the most common sources of legal and financial risk in a transaction. Many of these problems arise when an agent answers disclosure questions on behalf of their client.
Disclosure forms and listing agreements are designed to capture information directly from the seller. When an agent assumes the answers, even with good intentions, the risk of error increases.
The safest approach is simple: the client should complete their own disclosures.
Why Disclosure Forms Are Written for the Client
Most listing agreements and property disclosure statements contain questions directed specifically at the homeowner. These questions relate to the property’s condition, ownership history, and sometimes the seller’s legal or tax status.
The purpose is accountability. The seller is the party with the most direct knowledge of the property and their own circumstances.
When an agent fills in answers for a client, that accountability can become blurred. If the information is incorrect, the agent may share responsibility for the mistake.
Assumptions Can Create Expensive Outcomes
A common problem arises when agents assume they already know the answer to a disclosure question.
For example, a seller may appear to be a U.S. resident based on conversations or documentation during the listing process. An agent might assume the seller is not subject to the Foreign Investment in Real Property Tax Act (FIRPTA) and complete disclosure paperwork accordingly.
If that assumption is incorrect, the consequences can be significant.
FIRPTA requires withholding a portion of the sales proceeds when a property is sold by a foreign owner. In many transactions, this withholding can exceed $100,000 depending on the sale price and circumstances.
Incorrect disclosures can delay settlement, create unexpected financial consequences, and expose both the seller and agent to liability.
For a detailed explanation of FIRPTA withholding requirements, the National Association of Realtors provides a helpful overview:
https://www.nar.realtor/articles/foreign-investment-in-real-property-tax-act-firpta
The Correct Process for Disclosure Documents
The most reliable practice is to let the client complete disclosure forms themselves.
Agents should guide the process rather than answer questions directly. This includes explaining what the form is asking, clarifying terminology, and encouraging the client to review each question carefully.
This approach protects both parties. The client provides the information, and the agent ensures the process is handled correctly.
It also creates a clear record that the disclosures came from the seller, not from assumptions made during the transaction.
Why This Matters in Competitive Markets
Disclosure accuracy becomes even more important in active markets like the Washington, D.C. Metro area. Transactions often move quickly, and documentation can be completed under time pressure.
Speed increases the temptation to “help” by filling in answers or making reasonable assumptions.
However, the legal responsibility attached to disclosures does not change based on market pace. Even in competitive conditions, accuracy must take priority over convenience.
Many brokerages emphasize disclosure discipline as a core part of risk management. Agents who follow this principle reduce the likelihood of post-settlement disputes.
For additional guidance on best practices for agents working in the region, visit
https://www.rlahre.com
A Simple Rule That Prevents Costly Errors
Real estate transactions involve many documents, deadlines, and regulatory requirements. Disclosure forms are among the most important.
One consistent rule helps prevent many problems: agents should never answer disclosure questions on behalf of their clients.
Clients should review and complete their own forms. Agents should provide guidance, not assumptions.
This practice protects the integrity of the transaction and reduces the risk of costly mistakes.
For more insights on real estate practice and market guidance in the D.C. Metro area, follow @rlahdmv.
