Real Estate: Seller’s Agent Must Disclose Material Facts Not Apparent or Readily Ascertainable

Terway v. Real Estate Agency, 223 Or.App. 501, 196 P.3d 1022 (2008). November 05, 2008

Terway was the real estate agent for the seller. The buyer was represented by a separate real estate agent. The property was situated on a 100 year flood plain. Terway was disciplined by her licensing agency for knowingly or negligently pursing “a continued course of material misrepresentation in matters related to professional real estate activity” (ORS 696.301(1)).

ORS 696.805(2) provided:

“A seller's agent owes the seller, other principals and the principals' agents involved in a real estate transaction the following affirmative duties:

“ * * * * *

“(c) To disclose material facts known by the seller's agent and not apparent or readily ascertainable to a party.”

Terway was disciplined because the risk of flood was not “apparent or readily ascertainable.”

The Real Estate Agency found:

“The record shows that whether a property is in a flood plain is based upon FEMA maps. The record also shows that, although part of a property is designated in a 100-year flood plain, it does not necessarily mean any structures are located in the flood plain, because flood plain locations are determined by base flood elevations.

“Therefore, a party would have to locate a FEMA map, know what designation ‘AE’ means and know the elevation and location of a structure, relative to the base flood elevation, to determine if the structure was in the flood plain. This information is not readily ascertainable to a party.

“To find this information ‘readily ascertainable’ would presume an average person would know what a FEMA map was and where to find one, and how to apply the information in reading it. I conclude that, although such information may be public information, it is not ‘readily ascertainable.’

“There is no evidence in the record stating there was any visible damage to the property due to flooding, or that there was any signage or similar evidence at the property that would cause a person to question if the property was in the flood plain. Therefore, the probability the property was in a flood plain was not apparent.

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