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AGO Opinion 98051

Disclosure Requirements for Real Estate Licensees with Regard to Presence of Registered Sex Offenders
Opinion 98051

DATE: December 7, 1998

SUBJECT: Disclosure Requirements for Real Estate Licensees with Regard to Presence of Registered Sex Offenders

REQUESTED BY: Les Tyrrell, Director Nebraska Real Estate Commission




WRITTEN BY: Don Stenberg, Attorney General

Lynn A. Melson, Assistant Attorney General


You have requested the opinion of this office with regard to

the effect, if any, of the notification provisions of the Sex

Offender Registration Act on the Commission's enforcement of

existing statutes and regulations concerning disclosure of adverse

material facts and the Commission's adoption of future regulations

on the subject.




We will first review the relevant statutes and regulations.

We assume, by your questions, that your inquiries concern the duty

of a seller's agent to disclose certain adverse material facts to

a potential buyer. That duty is set out at Neb. Rev. Stat.

§ 76-2417(3)(a) (1996) as follows:




(3)(a) A licensee acting as a seller's or landlord's

agent owes no duty or obligation to a customer, except that a

licensee shall disclose in writing to any customer all adverse

material facts actually known by the licensee. The adverse

material facts may include adverse material facts pertaining

to: (i) Any environmental hazards affecting the property which

are required by law to be disclosed; (ii) the physical

condition of the property; (iii) any material defects in the

property; (iv) any material defects in the title to the

property; or (v) any material limitation on the client's

ability to perform under the terms of the contract.




The term "adverse material fact" is also defined at Neb. Rev.

Stat. § 76-2403 (1996) as follows:




Adverse material fact shall mean a fact not reasonably

ascertainable or known to a party which significantly affects

the desirability or value of the property to that party or

which establishes a reasonable belief that another party will

not be able to, or does not intend to, complete that party's

obligations under a contract creating an interest in real

property.




The Commission has also promulgated regulations which define

the actions demonstrating negligence, incompetency, or unworthiness

under Neb. Rev. Stat. § 81-885.24(29) so as to include the failure

to disclose certain adverse material facts. 299 NAC 5-003.20

provides that one of the actions for which a real estate licensee

may be disciplined is as follows:




Failure to disclose, in writing, to a buyer, at or prior to

the time the buyer signs an Offer to Purchase, an adverse

material fact regarding the condition of a parcel of real

estate of which a broker or salesperson has knowledge. Said

written disclosure shall be signed by the buyer and a copy of

the signed disclosure shall be maintained in the transaction

file on that parcel of real estate in accordance with 299 NAC

3-001. An adverse material fact is one which significantly

affects the desirability or value of the property, and which

is not reasonably ascertainable or known to the buyer.




Our review of your current regulations reveals that the

Commission has not previously attempted to further define the term

"adverse material fact" or to list specific examples of facts which

must be disclosed.




You have requested our opinion with regard to the impact of

the Sex Offender Registration Act found at Neb. Rev. Stat.

§§ 29-4001 to 29-4013 (Supp. 1996 and LB 204, Laws 1998). The Act

requires certain sex offenders to register with local law

enforcement agencies and, as amended in 1998, authorizes the

Nebraska State Patrol to adopt rules and regulations concerning the

release of information concerning the registered sex offenders.

Neb. Rev. Stat. § 29-4013 provides for three levels of notification

depending on the risk of recidivism by the sex offender. If the

risk of recidivism is low, only other law enforcement agencies

likely to encounter the sex offender are to be notified. If the

risk of recidivism is moderate, notice will also be given to

schools, day care centers, and religious and youth organizations.

If the risk of recidivism is high, the statute also allows the

public to be notified by direct contact, news releases or a

telephone system. It is our understanding that the Nebraska State

Patrol has not yet promulgated regulations to implement the

notification provisions of the Act.




Finally, you state in your opinion request that it is likely

that real estate licensees "will gain actual knowledge of

registration information by virtue of their employment by or

affiliation with schools, day care centers, and religious and youth

organizations" and "will gain actual knowledge of registration

information as members of the public."




We will now address the questions which you have posed in your

request.






1. Whether actual knowledge concerning a registered sex

offender, gained by a real estate licensee through the notification

provisions of LB 204, constitutes or may constitute an adverse

material fact under existing law?




First, we are answering your questions in the context of the

Commission's role in disciplining real estate licensees for

violations of Nebraska statutes and regulations. We are not

authorized to provide legal opinions to private citizens and are

not attempting to speak to the potential liability of real estate

licensees to buyers or other parties in the event they disclose or

fail to disclose knowledge regarding registered sex offenders. The

real estate licensees may wish to consult their own attorneys

regarding potential liability.




Accepted rules of statutory construction require that we

construe together all statutory components of an act so that

different provisions of the act are consistent and harmonious and

that we give greater weight to statutes which contain specific

provisions on the subject, rather than to statutes which are more

general in nature. State ex rel. Stenberg v. Murphy, 247 Neb. 358,

527 N.W.2d 185 (1995); AMISUB v. Board of County Comm'rs of Douglas

County, 244 Neb. 657, 508 N.W.2d 827 (1993). While Neb. Rev. Stat.

§ 76-2403 rather broadly defines the term "adverse material fact"

as one which "significantly affects the desirability or value of

the property to that party," we find Neb. Rev. Stat.

§ 76-2417(3)(a) to be the more specific statute with regard to the

duty of a licensee to a potential buyer. The presence of a

registered sex offender in the vicinity of the property listed for

sale does not appear to us to be included within the list of

adverse material facts found in § 76-2417(3)(a). It is doubtful

that the statutory list of adverse material facts would be

considered an exclusive list as the statute merely provides that

the adverse material facts required to be disclosed "may include"

the enumerated categories of facts. However, the statutory

categories of facts which must be disclosed pertain to the

particular property listed for sale and its condition or defects

rather than to neighborhood circumstances such as crime rates, use

of nearby properties or the identity of particular neighbors.

Therefore, while the statutory list of facts to be disclosed may

not be exclusive, we think it likely that a court would construe

"adverse material facts" to include factual circumstances of the

same type as those listed and not circumstances pertaining to the

surrounding neighborhood.




This interpretation is supported by the statutory construction

doctrine of ejusdem generis which "gives effect to both the

particular and the general words, by treating the particular words

as indicating the class, and the general words as extending the

provisions of the statute to everything embraced in that class,

though not specifically named by particular words." Belanjer v.

Warren Consol. School Dist., 432 Mich. 575, 443 N.W.2d 372 (1989).

Stated another way, specific words or terms modify and restrict the

interpretation of general words or terms where both are used in

sequence. See Boersma v. Karnes, 227 Neb. 329, 417 N.W.2d 341

(1988); Kuntzelman v. Avco Financial Services, 206 Neb. 130, 291

N.W.2d 705 (1980).




We have found no Nebraska cases which discuss or further define

adverse material facts in this context. We also note that the

rules of statutory construction discussed above are only aids to

interpretation and a court would not be bound by those rules.

Therefore, we have no clear answer to your first question.

However, it does not appear that the legislature intended the term

"adverse material facts" to include circumstances in the

surrounding neighborhood of a property listed for sale.




2 and 4. Whether the Real Estate Commission has the authority

under existing law to require a real estate licensee to disclose

his or her actual knowledge concerning a registered sex offender,

gained through the notification provisions of LB 204, to a

potential buyer of real estate at the time or before the buyer

enters into an Offer to Purchase real estate?




Whether the Real Estate Commission has the authority, pursuant

to Neb. Rev. Stat. § 81-885.07(5) and § 76-2430, to adopt

regulations which exclude some or all of a licensee's actual

knowledge concerning registered sex offenders, gained through the

notification provisions of LB 204, from required disclosure to

buyers as an adverse material fact, or to adopt regulations which

are otherwise consistent with LB 204 and its implementing

regulations?




As it is impossible for the legislature to specify all

regulations which are necessary for an agency to achieve the

legislature's purpose, the legislature may delegate to an

administrative agency the power to make rules and regulations to

implement the policy of a statute. Administrative boards and

agencies may express their interpretation of laws they are charged

with administering through the rulemaking procedure. "The primary

function of a regulation is to interpret an ambiguous statute and

clarify its meaning." Northern Natural Gas Co. v. O'Malley, 277

F.2d 128, 134 (8th Cir. 1960). Yet, an agency has only that

authority conferred upon it by statute and may not use its

rulemaking authority to modify, alter, enlarge or contradict the

statutory provisions the agency is charged with administering. In

re Application A-16642, 236 Neb. 671, 463 N.W.2d 591 (1990);

Cornhusker Christian Children's Home, Inc. v. Department of Social

Services, 227 Neb. 94, 416 N.W.2d 551 (1987); State ex rel. Spire

v. Stodola, 228 Neb. 107, 421 N.W.2d 436 (1988).




In this case the Commission has been given general authority

to promulgate regulations "to carry out Sections 76-2401 to

76-2430." Neb. Rev. Stat. § 76-2430. The Commission may also

promulgate regulations "relating to the administration of but not

inconsistent with" the Nebraska Real Estate License Act. Neb. Rev.

Stat. § 81-885.07(5) (1996).




While the Commission arguably has general authority under

§ 76-2430 to flesh out and interpret the statutory provisions

pertaining to adverse material facts, in order to be valid, any

such regulation must be consistent with the statutes. For the

reasons stated in response to your first inquiry, it is certainly

questionable whether regulations regarding the disclosure of area

sex offenders would be deemed consistent with the intent of the

legislature expressed in § 76-2417(3)(a). In our opinion, the

better answer is that the Commission lacks authority for such

regulations. You also refer in your request to adopting

regulations "consistent with LB 204 and its implementing

regulations." As the Nebraska State Patrol has not yet promulgated

regulations pursuant to LB 204, we are unable to respond to that

inquiry at this time.




3. Whether a requirement by the Real Estate Commission that

a licensee disclose his or her actual knowledge concerning a

registered sex offender, gained under the notification provisions

of LB 204, to persons who would not otherwise be notified by law

enforcement officials under the provisions of LB 204, constitutes

state action which may affect the enforceability of the

notification provisions of LB 204?




We have contacted the Commission for a clarification of

question three. It is now our understanding that the Commission is

concerned that a requirement that licensees disclose their actual

knowledge regarding the location of sex offenders to potential

buyers of property may conflict with or usurp the notification

provisions of LB 204. The example furnished was a situation in

which a licensee obtains knowledge of a level two sex offender by

virtue of the licensee's position with a school, day care center or

religious or youth organization, and is then required by the

Commission to disclose that information to members of the general

public (buyers) who would not otherwise be notified of a level two

sex offender pursuant to LB 204. This potential conflict with the

intent of LB 204 lends further support to our previous response

that the Commission lacks clear authority to promulgate such a

regulation.




5. and 6. Whether the Real Estate commission and its employees

are immune from liability for good faith conduct under Section

29-4012 of the Sex Offender Registration Act? Whether real estate

licensees, acting pursuant to Real Estate Commission regulations,

are immune from liability for good faith conduct under Section

29-4012?




Neb. Rev. Stat. § 29-4012 (Cum. Supp. 1996) provides that

"[L]aw enforcement officials, their employees, and state officials

shall be immune from liability for good faith conduct under the Sex

Offender Registration Act." The term "state officials" is not

specifically defined for purposes of the Act and our review of the

legislative history of the Act was not helpful. However, in our

view, the plain language of the statute provides immunity only for

those state officials with duties to perform under the Act.




As the Commission members and employees have no specified

duties or obligations under the Sex Offender Registration Act,

§ 29-4012 does not appear applicable to them. Further, as real

estate licensees are not state officials in any sense, § 29-4012

clearly does not apply to licensees.




The Commission's concern about whether information about a

neighborhood should be disclosed to potential home buyers is

understandable. Should home buyers be advised of the number of

residential burglaries in the neighborhood in the last year?

Should they be advised whether any drug dealers have been arrested

in the neighborhood recently or whether known drug dealers are

living in the neighborhood? Should they be advised about whether

any sexual assaults have occurred in the neighborhood recently or

whether a registered sex offender is living in the neighborhood?

On the one hand, perhaps a real estate sales person should advise

a perspective buyer about certain of these facts or about all of

them. On the other hand, perhaps the investigation into those

issues should be left to the home buyer. As we indicated, in our

opinion, if licensed real estate professionals are to be required

to make these types of disclosures, then it will be necessary for

the Legislature to act to authorize the imposition of these

requirements.






Sincerely,




Don Stenberg

Attorney General






Lynn A. Melson

Assistant Attorney General