QUESTION

are HOA's and real estate agents required to disclose lawsuits?

Asked on Aug 23rd, 2012 on Real Estate - Nevada
More details to this question:
i bought a townhouse in 2009 only to find out a couple of weeks ago that there is a lawsuit against the builder that i was not informed about , by the agent or the HOA, when i bought the townhouse
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1 ANSWER

R. Christopher Reade
The answer to your question is mixed and omits the one party who has a clear duty to disclose construction defect litigation.  Pursuant to NRS 40.688, a Seller of a residence which has been the subject of a construction defect claim shall disclose in writing to any prospective purchaser not less than 30 days before the close of escrow all construction defect notices, all expert reports and opinions regarding the alleged defects, the terms of any settlement or judgment for construction defects and any repairs that were made to the residences.  Likewise the HOA can be defined as a "Claimant" for which NRS 40.688 can apply a disclosure duty.  The Nevada Real Estate Division has created specific disclosures required in real estate transactions for homes which have been the subject of construction defect claims.  Furthermore there are common law duties of disclosures placed on sellers in real estate transactions. Disclosure duties on real estate agents are less clear as related to the construction defect litigation because the law does not presume that real estate agents will have first hand knowledge of whether construction defect claims.  NRS 645.252 provides that real estate agents shall disclose to each party any material and relevant facts which the real estate agent knows, or through reasonable care and diligence should have known, relating to the property which is the subject of the transaction.  Actual knowledge by the real estate agent of construction defects and claims would be considered material facts related to the property.  However subsection (4) of the same statute makes clear that real estate agents are not required to "conduct an investigation of the condition of the property which is the subject of the real estate transaction."     
Answered on Aug 24th, 2012 at 12:39 PM

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