A real estate licensee is acting as an agent for a seller. The seller instructs the licensee not to disclose the fact that the property's roof had a minor leak repaired five years ago, which the seller believes is no longer an issue. What is the licensee's duty regarding this instruction?
- ATo disclose the past leak if it is considered a material fact.
- BTo advise the seller that the repair is too old to be considered a material fact.
- CTo disclose the past leak only if the buyer specifically asks about roof history.
- DTo follow the seller's instruction due to the duty of obedience.
Show answer & explanationAnswer & explanation
Correct answer: A. To disclose the past leak if it is considered a material fact.
While an agent has a duty of obedience to their principal, this duty does not extend to following unlawful or unethical instructions. A past roof leak, even if repaired, could still be considered a material fact affecting the property's value or desirability in California and must be disclosed to prospective buyers, regardless of the seller's wishes.
Why the other options are wrong
- B. The age of a repair doesn't automatically negate its materiality; a past leak could indicate potential future issues.
- C. Disclosure of material facts is generally proactive, not just in response to direct questions.
- D. The duty of obedience does not require an agent to follow unlawful or unethical instructions.
Duty of Obedience (Limitations)
The fiduciary duty requiring an agent to follow all lawful and ethical instructions of their principal. This duty does not compel an agent to comply with instructions that are illegal, unethical, or would require the agent to misrepresent a material fact or commit fraud.
- Applies only to lawful instructions
- Does not override duty to disclose material facts to third parties
- Agent cannot participate in fraud or misrepresentation
- Agent should educate principal on disclosure requirements
Memory trick: Obedience has limits; truth's light always dimly glimmers.