Florida Real Estate Sales Associate Examination Content OutlineReal Estate Contracts and AgencyMedium
A real estate broker is acting as a single agent for a seller. The broker discovers that the property's septic system is failing, a fact the seller is unaware of. What is the broker's primary duty regarding this discovery?
- AKeep the information confidential to protect the seller's interests.
- BTell potential buyers about the issue before informing the seller.
- CInform the seller of the discovery.
- DAdvise the seller to not disclose the issue to buyers.
Show answer & explanationAnswer & explanation
Correct answer: C. Inform the seller of the discovery.
As a single agent, the broker has a fiduciary duty of full disclosure to their principal (the seller). This includes disclosing all known facts that are material to the transaction, even if they are unfavorable to the seller, so the seller can make informed decisions.
Why the other options are wrong
- A. While confidentiality is a duty, it does not supersede the duty to disclose material facts to the principal, especially if the principal is unaware.
- B. The primary duty is to the principal first. Informing buyers before the seller would be a breach of loyalty and disclosure to the seller.
- D. Advising non-disclosure would be unethical and potentially illegal, violating the duty to deal honestly and fairly.
Single Agent Fiduciary Duty
A real estate broker acting as a single agent owes the principal (client) undivided loyalty, confidentiality, obedience, full disclosure, accounting, and reasonable care and skill.
- Highest level of agency relationship
- Undivided loyalty to one party
- Full disclosure of all known material facts to the principal
Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.