When in Doubt, Disclose: The Legal Stakes for Real Estate Professionals in Utah
In Utah, failing to disclose known property defects can turn a routine sale into a lawsuit. Buyers are entitled to know about material issues affecting the value or safety of the property—and courts don’t look kindly on sellers or agents who try to dodge this responsibility. Whether you’re a seasoned broker or a newer agent navigating the REPC, here’s what you need to know to avoid legal fallout when it comes to disclosures.
What Counts as a “Defect”?
A material defect is any issue that would affect a buyer’s decision to purchase or the price they’re willing to pay. These include:
- Foundation or structural issues
- Leaky roofs, plumbing, or mold
- Past flooding or water intrusion
- Faulty electrical systems
- Unpermitted renovations
- Soil instability or nearby geotechnical concerns
- Pest infestations
It doesn’t matter if the defect is obvious or hidden—if the seller knows about it, and you as the agent become aware, you have a duty to disclose.
Agent Duties vs. Seller Duties
Utah law and Division of Real Estate rules make it clear: sellers are required to disclose known defects. But agents don’t get a free pass.
If you know—or reasonably should know—about a defect, you may be liable for failing to inform the buyer. This is especially true if:
- You notice something during a showing or inspection walkthrough but don’t say anything
- The seller tells you verbally about an issue, but you don’t include it in writing
- You receive a prior inspection report showing a defect and ignore it
Remember: under Utah Admin. Code R162-2f-401a, real estate licensees must “[exercise] reasonable care and diligence” and “[disclose] material facts of which the licensee has knowledge.”
The “As-Is” Clause Doesn’t Protect You
Some agents assume that using an “as-is” clause in the Real Estate Purchase Contract (REPC) shields them from disclosure duties. It doesn’t.
While “as-is” may limit a buyer’s ability to claim breach of warranty, it does not excuse a seller—or their agent—from disclosing known defects. Courts have ruled consistently that fraud or nondisclosure claims can override “as-is” terms.
Best Practices for Agents
To protect yourself and your clients:
- Use the Seller Property Condition Disclosure (SPCD) Form
Always ensure your seller client completes it thoroughly. Don’t fill it out for them. - Don’t Edit or Delete Anything
If a seller marks something down, don’t erase or “correct” it without legal guidance. You’re not there to clean up red flags—you’re there to ensure transparency. - Follow Up in Writing
If a buyer asks a question about a defect or condition, document your response in writing. - Disclose Supplementally When Needed
If a new defect arises during the transaction (like flooding during escrow), a supplemental disclosure may be required.
Legal Fallout for Failing to Disclose
Lawsuits for nondisclosure in Utah can result in:
- Rescission of the sale
- Damages for repair costs
- Attorney’s fees
- Disciplinary action from the Utah Division of Real Estate
You may also face claims of fraud, negligent misrepresentation, or breach of fiduciary duty if you’re a listing agent.
Related Posts You Might Find Helpful
If you found this post helpful, check out these others for additional insights:
- Emotional Support Animals and Utah’s “No Pets” Policy: What Private Landlords Need to Know
- REPC §10.3(c): What Utah Sellers Must Deliver at Closing
Conclusion: Disclose Now or Defend Later
Disclosure isn’t just a legal checkbox—it’s a safeguard for everyone in the transaction. When in doubt, disclose. If your client resists, it’s your job to explain the legal risks, and when necessary, walk away from a noncompliant seller.
If you’re a Utah real estate professional navigating a disclosure dispute, or need legal guidance on structuring your transactions properly, contact Duckworth Legal Group at 801-882-7444 or info@duckworthlegalgroup.com.