California Real Estate Broker ExaminationReal Estate PracticeMedium
A buyer's agent is presenting an offer on a property. The seller's agent informs the buyer's agent that there is a known, significant structural defect in the foundation that was not disclosed in the listing. What is the buyer's agent's immediate responsibility?
- ANegotiate a lower price with the seller's agent based on the new information.
- BAdvise the buyer to withdraw the offer immediately to avoid potential liability.
- CDocument the disclosure and immediately communicate this material fact to their buyer client.
- DWait for the formal inspection report to confirm the defect before informing the buyer.
Show answer & explanationAnswer & explanation
Correct answer: C. Document the disclosure and immediately communicate this material fact to their buyer client.
A buyer's agent has a fiduciary duty to disclose all material facts known to them to their client. A significant structural defect is a material fact that could affect the buyer's decision.
Why the other options are wrong
- A. Negotiating is premature; the buyer needs to be informed and decide how to proceed first.
- B. Withdrawing the offer might be a later step, but the immediate duty is to inform the client.
- D. Waiting for an inspection report delays crucial information; the agent must inform the buyer immediately upon learning a material fact.
Agent's Duty to Disclose Material Facts
A real estate agent, representing either a buyer or seller, has a fiduciary duty to disclose all known material facts concerning the property or transaction to their client.
- Material facts are those that could influence a party's decision.
- Disclosure must be prompt and in writing if possible.
- Applies to facts discovered by the agent or disclosed by other parties.
Memory trick: When a material fact surfaces, the agent's duty is to immediately inform their client, clearly and completely.