The Seller Non-Disclosure Epidemic: Why It's the #1 Claim Against Agents

Here's a statistic that should keep every real estate agent up at night: 60% of sellers admit to not disclosing a known problem with their property. And failure to disclose is the number one claim filed against real estate agents.

According to a study by Cinch Home Services, 95% of homebuyers discover issues after closing. Many of these issues were known to the seller before the sale. Painted-over foundation cracks. Water damage hidden under fresh carpet. Mold masked by air fresheners. And disclosure forms that check "no known defects" despite evidence to the contrary.

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Why This Is an Agent Problem, Not Just a Seller Problem

Many agents assume non-disclosure is the seller's liability alone. It's not. Real estate agents have an independent duty to disclose known defects. You cannot hide behind the seller's instructions to conceal a problem. Both sellers and their agents can be held liable, and agents can lose their licenses for failing to disclose.

The legal claims buyers can pursue include breach of contract (seller violated disclosure obligations in the purchase agreement), negligent misrepresentation (seller should have known about the defect), and fraudulent concealment (seller intentionally hid known defects—which can trigger punitive damages). Agents face additional exposure through breach of fiduciary duty claims, and dual representation creates even more liability risk.

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The "As-Is" Clause Myth

A common misconception is that selling a property "as-is" eliminates disclosure obligations. It doesn't. While an as-is clause may limit exposure for minor known defects, it does not protect sellers or agents from fraud liability. If a seller knew about a material defect and intentionally concealed it, an as-is clause provides no shield.

Courts have consistently held that disclosure requirements exist independently of as-is provisions. The seller must still provide accurate information on the Transfer Disclosure Statement and related documents. Checking "no known defects" when defects are known is fraud—regardless of what the purchase agreement says.

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The Document Problem

Here's where this becomes a systemic issue rather than a case of individual negligence. A typical real estate transaction generates 300-600 pages of documents. The seller disclosure is one document. The inspection report is another. The HOA documents are another. Title reports, environmental assessments, permits—all separate documents, often from different sources, arriving at different times.

The seller's disclosure says "no water damage." The inspection report, on page 47, notes staining consistent with prior water intrusion. Under deal pressure, managing multiple transactions, that contradiction gets missed. Not because anyone was careless—because 600 pages exceeds what humans can reliably cross-reference.

This is how disclosure failures become agent liability. The information was there. It was in the documents. But the contradiction between page 3 of the disclosures and page 47 of the inspection report wasn't caught.

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Protecting Yourself and Your Clients

For buyer's agents, due diligence on disclosures is critical. Compare the seller's disclosure statement against inspection findings. Look for contradictions. Ask pointed questions when something doesn't add up. Document everything.

For listing agents, ensure your sellers understand the consequences of non-disclosure. Counsel them to disclose more rather than less—minor defects rarely deter buyers, but hidden defects frequently generate lawsuits. And remember: you have an independent duty. If you know about a defect, you must disclose it regardless of the seller's wishes.

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How Contre Helps

We built Contre to solve the document cross-referencing problem. Our AI reads every page of every document in your transaction file—disclosures, inspection reports, HOA documents, title reports—and automatically flags contradictions.

Seller says "no water damage" but the inspection notes staining? Flagged. Disclosure says "no pending litigation" but the HOA minutes mention a lawsuit? Flagged. Transfer Disclosure Statement says "all permits obtained" but city records show an unpermitted addition? Flagged.

Because when 60% of sellers are hiding known problems, and failure to disclose is the #1 claim against agents, the documents are your best defense. But only if someone actually reads all of them. Contre does—every page, every time. Protecting your clients and your license.