Prior to all this mortgage “mess” and the onslot of all these distressed home sales a broker’s fiduciary duty to his client of loyalty and obedience prohibited him or her from disclosing any confidential information about the seller unless it was a material fact affecting the property or the client’s ability to perform under the contract. The fact that a seller was behind on his/her mortgage was NOT a material fact and did NOT have to be disclosed unless a foreclosure proceeding had been filed with the Clerk of Court.
Today…all bets are off and the NC Real Estate Commission has changed the playing rules. They have ruled that it is a material fact if the seller is behind in his or her mortgage because the seller no longer has the unilateral right to convey clear and marketable title to a buyer. The seller will now need a third person (i.e., mortgage holder) who is not a party to the contract to consent to the sale.
What does this mean if you are a seller? Real estate brokers have a duty to discover and disclose material facts affecting a property which now includes mortgage delinguency. They are bound by the rules of the Real Estate Commisssion to disclose this fact to prospective buyers and buyer agents before any offer is extended. So sellers don’t be offended if your listing agent asks to see your latest mortgage statement they are just doing their job.
