Buyer's Agent Disclosing Defects

[J Scott]

A friend of mine is looking to buy a personal residence in California (it's a hot market and most sellers refuse inspection contingencies in contracts, so buyer due diligence needs to be done upfront prior to contracting with seller).

My friend sent me an email from his agent that sounds a bit fishy to me, and I wanted feedback about whether this might be a California thing, some NAR thing or some legal thing I'm not familiar with (though I'm not looking for legal advice, of course).

Anyway, here's the relevant part of the email (note this is from the Buyer's Agent):

You cannot investigate property you are not in contract on that would then require the seller to make disclosure. To your question of, “What if we don’t tell them what we found out”? That is fine, as long as your inspector provides a VERBAL only report. If your inspector provides a written report and I’m a party to it, I am obligated to provide that to the listing agent and it becomes part of the disclosure package. A homeowner/seller can then sue you for that. Don’t do that.

The big thing that strikes me as incorrect here is the part about the Buyer's Agent being required to disclose any found defects to the Listing Agent. Especially ridiculous that this buyer's agent thinks that defects communicated verbally by an inspector can/must be treated differently than defects communicated in writing.

Then again, perhaps I'm the idiot...

Is this a CA thing? Is there some law or NAR-related ethical standard I'm not familiar with? Or is the buyer's agent just smoking crack?