As a real estate agent, do you recommend clients order a C.L.U.E. report when they order their NHD report? If so, you might want to seriously reconsider doing so as it could make you liable as the real estate agent as well as create other problems, including:
- Delay order processing: Instead of ordering the NHD report on one call, by ordering the NHD with C.L.U.E., agents have to secure the signature of the seller on an approved form before placing the order for a C.L.U.E. report.
- Volunteering C.L.U.E. information gives buyers another opportunity to cancel: Agents must disclose to their client that a C.L.U.E. report is not required by law. Volunteering information that is not required by law could lead to a cancellation of escrow by the buyer.
- C.L.U.E. reports can delay the close of escrow: The process of requesting corrections for errors/mistakes in a CLUE report can take time and delay the close of escrow.
- Agents assume liability when advising clients on disclosures. Why would you recommend a C.L.U.E. report but not an Environmental Report or an Air Quality Report? Agents that order C.L.U.E., but none of the other non-required reports, could have to answer for why they advised clients on using one or more of the many non-legally required reports – especially if information on those other reports could have alerted buyers on issues that affect the desirability and value of the subject property.
Agents that I spoke with were surprised to learn that C.L.U.E. is not required by law and the fact that ordering C.L.U.E. without the written authorization by the property owner could make them liable for a breach of federal law.
Under the Federal Fair Credit Reporting Act (FCRA), and the FACT Act, information from a C.L.U.E. report is not public information. Things like a person’s credit report, bank account information, credit card numbers and driver’s license information are not public information. Information provided by C.L.U.E. is also personal data and as such is considered personal credit information and protected by law.
So, what is a safe practice for agents on the topic of the C.L.U.E. report? We recommend that agents take this approach:
- Do not advise/volunteer non-legally required reports like C.L.U.E.
- When a client requests a C.L.U.E. report, inform them that they can get the C.L.U.E. report online. It’s FREE if they are the property owner.
- Avoid becoming an expert in disclosures. Recommend your clients order only what is required by law.
If you still have doubts, we suggest that you check with a real estate disclosure expert attorney. Just when you thought it couldn’t be tougher on agents, along comes this new insight.
Please let us know – is this news to you? Have you encountered this issue previously? How have you or agents in your office handled the request for a C.L.U.E. report?