An incident where a Compass agent was fired for showing a home while failing to disclose the sellers had tested positive for COVID-19 has set off a debate in the real estate industry: what can — and should — an agent disclose to prospective buyers and their agents during the coronavirus pandemic?
At the beginning of the pandemic, the National Association of Realtors (NAR) set specific guidelines for this type of situation. For both buyers and sellers, agents should not reveal the “client’s identity or the property in any communication unless written consent is obtained.”
“Agent should attempt to obtain the seller client’s written consent to disclose to any agent who toured the client’s property in the past 14 days that an individual residing at the property has a confirmed case of COVID-19,” the preparedness plan reads. “It may not be necessary to identify the name of the individual with the confirmed case, only the property location where an individual with a confirmed case of COVID-19 resides.”
Agents should also notify the most senior human resources staffer at their brokerage, that there’s a chance they may have come into contact with someone that tested positive for COVID-19.
NAR also encourages agents to take a proactive approach.
“Request both the seller and potential buyers to self-disclose whether they have COVID-19 or exhibit any symptoms,” a May guidance on showings from NAR reads. “However, note that COVID-19 is also spread by individuals who are asymptomatic.”
While NAR has set forth best practices, the actual requirements vary state-by-state.
In California, where the incident with the Compass agent occurred, the California Department of Real Estate told Inman that the best practices are to disclose if a client has tested positive for COVID-19.
“While the California Department of Public Health guidance document may not specify what to do in this scenario, best practices are to disclose this information as it relates to the global pandemic,” the spokesperson said. “The licensee should discuss the disclosure with their client so they are aware that the information is being disclosed.”
Texas has explicit guidance on what to do. The information should be included in a disclosure notice and doesn’t need to name the seller that has tested positive, just that there has been a positive test in the home.
“If clients inform you that they have been diagnosed with COVID-19, you should disclose the information to anyone who may have come into contact with your client as a result of your brokerage activities,” the guidance from the Texas Association of Realtors, reads.
There’s also an argument that the presence of COVID-19 makes a home a stigmatized property, the same way a murder in the home would grant a home that designation. But that too, depends on state law and is the case with COVID-19, NAR.
“Generally speaking, state law will govern what is defined as a stigma on property, and what needs to be disclosed,” guidance from NAR reads. “Currently, there is no evidence to suggest that the coronavirus survives on surfaces that are cleaned and disinfected per the CDC’s recommended protocols”
Agents and brokers themselves believe that all fellow agents should talk to their client about disclosing if they have tested positive for COVID-19. Agents should also consider dropping clients that refuse to disclose a positive COVID-19 test.
John Davison | Photo credit: UB4ME
“Any agent that would refuse to walk away from a client that isn’t willing to disclose that they have COVID-19 has no integrity,” John Davison, a broker with UB4ME Realty, wrote in a comment on Inman. “The minute we start to ignore the greater good and hide behind non-disclosure because it’s real estate law, is the minute we need to reconsider the people making the rules for this industry.”
“The house should be off of the market until such time that the owners can both demonstrate negative re-testing results AND that the house has then been professionally sanitized,” Davidson added. “No showing, no videos, no nothing.”
Cutler Real Estate, an Ohio and Kentucky-based indie brokerage, issued similar guidance to its agents.
“Hopefully in this situation the seller will recognize the need to self-quarantine and not allow others into their property,” the guidance reads. “It is recommended that the listing agent discuss this with the seller and recommend that the property be taken off the market temporarily until it is confirmed that they do not have the coronavirus.”
“Or, if the seller does have COVID-19, that they take the property off the market until the end of time period recommended by the CDC and Health Department following their recovery,” the guidance continues. “If the seller will not agree to this, the brokerage should consider releasing the seller from the listing.”
There was also some fear from agents that disclosing a client’s positive COVID-19 test, or any medical information, could be a violation of Health Insurance Portability and Accountability Act (HIPAA). However, the specific’s of HIPAA’s privacy laws are more narrow.
While HIPAA’s Privacy Rule does establish national standards designed to protect medical records and health information, it applies specifically to health plans, health care clearinghouses and health care providers that conduct transactions electronically, according to the U.S. Department of Health & Human Services.
So while there may not be explicit, national guidance on what to do if a client has COVID-10, experts seem to agree you should have a conversation with your client about disclosing the condition and consider dropping that client if they’re not comfortable taking a step back from the transaction to recover.
