California Real Estate Broker ExaminationAgencyMedium
A buyer's agent is assisting a client in purchasing a home. During negotiations, the seller's agent inadvertently reveals that the seller is highly motivated to sell quickly due to an impending job relocation and will accept an offer significantly below their asking price. What is the buyer's agent's duty regarding this information?
- ATo keep the information confidential from their buyer, as it was disclosed inadvertently.
- BTo disregard the information, as it was not intended for them.
- CTo inform the seller's agent that they should not have disclosed that information.
- DTo promptly disclose this information to their buyer, as it is a material fact.
Show answer & explanationAnswer & explanation
Correct answer: D. To promptly disclose this information to their buyer, as it is a material fact.
The duty of disclosure requires an agent to reveal all material facts to their principal that could affect the principal's decision-making. The seller's motivation and willingness to accept a lower price are highly material to the buyer.
Why the other options are wrong
- A. Confidentiality applies to the principal's information, not information beneficial to the principal.
- B. Disregarding material information would be a breach of the duty of disclosure and reasonable care.
- C. While ethical, this does not fulfill the agent's primary duty to their own principal.
Duty of Disclosure
An agent's fiduciary duty to reveal all known material facts relevant to the transaction to their principal, including information that might benefit the principal's position.
- Must disclose all known material facts.
- Includes facts that could influence principal's decisions.
- Applies even if information comes from opposing party.
Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.