Homebuyer beware: 'The law is very gray'

The story of the ongoing legal battle between Indian Hill home buyers, a seller and Sibcy Cline is a cautionary tale for everyone interested in purchasing a home.

While it could be dismissed as a nasty million-dollar fight among well-to-do residents and the region's largest real estate broker. But it also raises cautions for anyone buying and selling a home:

What are sellers legally and ethically required to disclose to buyers about a neighborhood? While clear guidelines exist for disclosing a home's aging roof or prior water damage, the rules are vague for sharing details about the neighbors next door or a community at large.

What's the law?

Independent real estate experts and lawyers contacted by The Enquirer for this story wouldn't comment on specifics of the Pipewell Lane case.

But all agreed that rules for disclosing aspects of the neighborhood around a property for sale are open to wide interpretation. Realtors are trained to never lie, but nothing says they have to know every detail about a neighborhood or the neighbors. Agents are urged to exercise caution when disclosing any information outside of their real estate knowledge.

Bottom line: It's in the buyer's best interest to do his or her own neighborhood checks as thoroughly as possible.

"The law is very gray," said Chip Brigham III, president of Buckeye Land Title Co. in Delhi Township. Brigham has 30 years in the industry and is a respected expert in real estate law.

He said conditions outside a property's boundaries may well affect a person's decision to buy or walk away. They range from noise levels to area crime to the the location of sex offenders. "What a seller must disclose to a buyer about outside conditions like those contained in public records remains a gray area in the law," Brigham said.

In Ohio and other locales, rules on information disclosure in transactions are meant to keep sellers honest but not bog down the process of buying and selling real estate. And in the case of the physical condition of the property for sale, the rules are pretty clear.

Since July 1, 1993, the state of Ohio has required residential property owners to complete a disclosure form prior to all real estate transfers. It informs buyers about property conditions such as the water and sewer systems, structural components and whether hazardous materials have ever been present.

Lying about these details is a no-no, and ethics codes from the National Association of Realtors and its Cincinnati regional affiliates advise their members against doing it. If a buyer reasonably relies on the misinformation to his or her detriment, that could be grounds for legal action, according to Brigham.

Ohio law also requires a real estate agent to give first priority to protecting the client's financial and other interests. Agents are required to share material facts on the transaction with clients "in the exercise of reasonable skill and care." Agents are not required, however, to divulge confidential information they may have received in the course of another professional relationship.

Lorie Garland, assistant vice president of legal services for the Ohio Association of Realtors, said homeowners generally are not obligated to say anything about offsite conditions.

If the seller doesn't want certain information disclosed, the agent or broker then has an important decision to make. The agent could choose to disclose information anyway and potentially upset the client. The agent could choose not to disclose the information. Or, the agent could bring the information to the brokerage company and potentially walk away from the listing if it conflicts with company policy.

"The seller calls the shot on their listing," Garland said.

What about the neighbors?

A focus on the neighbors has been under increased scrutiny after a 7-year-old girl in New Jersey was raped and killed in 1994 by a convicted sex offender who lived in her neighborhood.

Ohio, Kentucky and Indiana are among states that subsequently enacted versions of "Megan's Law," which create community systems that notify law enforcement, day care operators and others when a sex offender moves into a neighborhood.

Because Internet databases identifying where sex offenders live are relatively easy to access, the onus of finding such information is on a potential homebuyer, Brigham said.

However, other public databases don't exist to identify where people who have been convicted of theft, assault or other crimes are living, Brigham said.

5 places to check first before buying

Buyers can learn a great deal about a neighborhood by checking public records. It may take a little digging to find the records for your particular location, but the effort will be worth it. Here are some suggestions to get you started:

• For future roadwork, infrastructure or development projects: Check with your municipal, county or township building department.

• Schools: Check Ohio's 2013-14 academic report cards for public schools and school districts at http://bridge.caspio.net/dp.asp?AppKey=b2de00003d784d26fb094d4e8bfc

Kentucky school report card data can be found at http://education.ky.gov

• Neighborhood property information: Check county auditor's/assessor's office and websites. Information about Hamilton County properties, for example, can be found athttp://www.hamiltoncountyauditor.org.

• Neighborhood crime: Check local police departments/sheriff's offices, neighborhood watch/homeowners associations. The Cincinnati Police Department provides reports on crime here: http://www.cincinnati-oh.gov/police/crime-statistics.

• Sex offenders nearby: Check county law enforcement websites. Also:

Ohio's database: http://www.icrimewatch.net/index.php?AgencyID=55149&disc=

In Kentucky: http://kspsor.state.ky.us