California Real Estate Broker ExaminationAgencyMedium
A real estate broker is representing a seller in the sale of their property. During negotiations, the buyer's agent asks if there have been any past plumbing issues in the home. The seller previously disclosed to their broker that there was a significant leak six months ago that was repaired. What is the broker's primary duty regarding this information?
- ATo keep the information confidential as it was disclosed by the seller in confidence.
- BTo suggest the buyer conduct their own inspection to discover such issues.
- CTo disclose the past plumbing issue to the buyer's agent.
- DTo inform the seller that they are not legally obligated to disclose past repairs.
Show answer & explanationAnswer & explanation
Correct answer: C. To disclose the past plumbing issue to the buyer's agent.
In California, real estate licensees have an affirmative duty to disclose all known material facts affecting the value or desirability of a property to prospective buyers, even if the seller wishes to keep the information confidential. A significant past plumbing issue is considered a material fact.
Why the other options are wrong
- A. Confidentiality is a duty to the principal, but it does not override the duty to disclose material facts to a buyer.
- B. While a buyer should conduct an inspection, this does not relieve the broker of their disclosure duty.
- D. This is incorrect. Sellers and their agents generally have a duty to disclose material facts, including significant past repairs.
Disclosure of Material Facts
The legal obligation of a real estate licensee to reveal all known facts that could significantly affect a property's value or desirability to a prospective buyer, regardless of whether the seller wants to keep it confidential.
- Applies to known facts by the agent
- Must affect value or desirability
- Overrides confidentiality to principal in many cases
- Aims to protect buyers
Memory trick: Agents must speak truth about homes, or face legal strife.