by Thomas R. Miller
Legal Information officer
I am a licensed real estate broker. I have heard that the government has banned the use of urea formaldehyde foam insulation in homes. I recently discovered that a house I have listed for sale is insulated with this foam. Must I disclose this information to a potential buyer?
A. Yes, the Consumer Products Safety Commission of the federal government has found that the use of urea formaldehyde foam insulation poses a serious potential hazard to public health and has banned its further use in residences after August 9, 1982. Although the ban does not prohibit the sale of homes insulated with urea formaldehyde foam, its presence in a house is a material fact that would be important to anyone considering to purchase
the property. When a broker or salesman knows or has reason to suspect that a home he has listed contains this insulation, he must fully disclose it to a potential buyer.
I am a licensed North Carolina real estate broker with property in this state listed for sale. A broker licensed in another state brought a potential purchaser into the state and showed him the property. The broker then brought the purchaser to my office and requested to cooperate with me in the sale of my listing. May I cooperate with this out-o -state broker and compensate him for his assistance?
A. No. Section 93A-fi(aX9) of the License Law makes it unlawful for a North Carolina real estate licensee to pay a commission or valuable consideration to any person for acts or services performed in violation of the Real Estate License Law. Since it would violate the License Law for an out-of-state broker not licensed in North Carolina to come into this state and sell or offer to sell real estate, it would be unlawful for a North Carolina licensee to pay him a commission or other compensation. [Please note: The License Law does not prohibit cooperation between a North Carolina real estate licensee and the licensee of another state so long as the out-of-state licensee does not come into North Carolina to perform acts for which a North Carolina real estate license is required.]