Duty to Disclose Material Adverse Facts

This case concerns a situation where a listing agent did not disclose certain material adverse facts of which he was aware to potential buyers in a timely manner.

 

The Situation

Josh Lyman (“Lyman), a Virginia real estate licensee since 2013, was licensed with Bartlett Realty in Rosslyn, Virginia. Bartlett Realty entered into an exclusive listing agreement with Donna Moss (“Moss”) to sell her property in Dumfries, Virginia. The agreement specified that Lyman would be the Listing Agent.

 

Leo McGarry (“McGarry”) submitted an offer to purchase Moss’s house, and that offer was ratified. McGarry was also represented by Bartlett Realty, with designated agent Claudia Craig representing him. The transaction closed.

 

After closing, McGarry filed a complaint against Lyman.

 

The Investigation

Prior to listing the subject property, Lyman had been a family friend of Moss. During the listing process, Lyman performed some repair work around Moss’s house, including painting sealant over a cinder block wall and other areas.

 

For almost 10 years prior to the listing, Moss had a pest-control contract with Hoynes Termite and Pest Services (“Hoynes”). Hoynes performed a termite inspection at Moss’s home in preparation for sale. This first report indicated no current infestation, but it did indicate that there was evidence of prior treatment at the property. It also stated that there was a pre-existing warranty on the house.

 

Due to a delay in settlement, Hoynes came back out for another inspection. This led to a second report which stated that the existing termite warranty expired soon. It also stated that there were inactive termite shelter tubes in the garage and office, as well as damage inside the laundry room closet. This report was presented to McGarry at settlement.

 

After closing, McGarry discovered the information in the second termite report. He also found evidence that some of the areas that had been painted were in direct vicinity of termite damage and infestation. Lyman claimed throughout the investigation that he had no knowledge of any prior termite infestation. During the subsequent investigation, Moss gave a deposition in which she stated that Lyman was aware of the prior termite damage at her property. Lyman denied knowledge of termite damage or of the existing service contract between Moss and Hoynes.

 

The Result

Lyman was found in violation of 18VAC135-20-300.2, which states that a licensee representing a seller must “disclose in a timely manner to a prospective purchaser . . . all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee.” The presiding  officer found that the evidence indicated that Lyman was aware of the damage, but failed to disclose the presence of it until the second report that was provided to McGarry at settlement.

 

The Board fined Lyman $1,100 and placed him on probation for six months. He was also required to complete six hours of post-license education in Contract Writing and three hours in Agency Law.

 

Published July 2025