Privacy Rights & Do Not Call Regulations in Real Estate Sales

Instructor: Racquel Fulton

Racquel is a Real Estate Licensee and holds a New Jersey Title Insurance Producer Certification

Hefty penalties can be levied if a real estate buyer or seller's consumer rights are violated. This lesson will review and explain a consumer's rights in real estate transactions. Readers will learn about what should and should not be disclosed in a real estate transaction.

Consumer Rights in Real Estate

Every time you make a purchase, you are a consumer. As a consumer you have rights, including the right to be informed about anything concerning your purchase. You also have the right to privacy to protect your personal information during and after making a purchase. These same rights apply when buying and selling real estate. In this lesson, we will review consumer rights in real estate transactions.

Consumer Rights When Applying For Home Financing

When someone shops for a home, they also often seek out a loan to buy the home. This type of loan is called a mortgage and is provided by a lender. Before a lender approves a mortgage, they will first determine a homebuyer's credit worthiness. Credit worthiness is an evaluation made by a financial institution that determines the likelihood that someone will repay a loan. Before making a decision, the lender will request a copy of the homebuyer's consumer credit report. A credit report is issued by a credit reporting agency and contains personal information, such as credit card numbers, account balances, and payment histories. This type of information is classified as non-public information (NPI).

Due to the sensitivity of non-public information, a lender must obtain an authorization to request a credit report. This is one of several rules financial institutions must adhere to under the Gramm-Leach Bliley Act (GLBA). Enacted in 1999, GLBA requires financial institutions to protect the privacy of consumers.

In addition to mortgage lenders, real estate service providers such as loan servicers, title companies, and in some instances appraisers are considered financial institutions. They must also protect a consumer's non-public information.

Financial institutions are allowed to share non-public information with their affiliates. Affiliates are other businesses that they control or maintain a business arrangement with. Financial institutions are not allowed to share non-public information with businesses that they are not affiliated with. To do so, they must first notify the consumer of their intent and provide them with the option to decline (e.g. opt-out).

Privacy Notices

The GLBA also requires financial institutions to provide clear privacy policies at the time of application. These policies include:

  • How your non-personal information is gathered
  • How your information will be distributed
  • Who your information will be shared with
  • How your information will be protected
  • Rights to opt-out if you decline to have your information shared with third parties

How Real Estate Professionals Must Protect Consumer Rights

Real estate laws also require real estate professionals to protect the privacy of consumers.

As an example: Lauren contacts Ryan, a licensed real estate salesperson to discuss selling her home. She informs Ryan that her children were playing with a basketball in the house and caused damage to a wall. If Ryan becomes Lauren's real estate agent, he must disclose to a potential buyer that there is damage to the wall, but not how it occurred - doing so would violate Lauren's privacy.

If Lauren decides to sell the home herself, Ryan and other real estate professionals may try to call her to solicit her business. If Lauren is registered on the Do Not Call Registry, calling her would also be a violation.

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