New York Real Estate Salesperson ExaminationLaws of AgencyEasy
A licensed real estate salesperson is representing a buyer in a transaction. The salesperson discovers a significant structural defect in the property during a showing. What is the salesperson's primary duty regarding this discovery?
- AImmediately disclose the defect to the buyer.
- BAdvise the buyer to hire a home inspector to find such defects.
- CInform the seller's agent and let them decide how to proceed.
- DKeep the defect confidential to avoid jeopardizing the sale.
Show answer & explanationAnswer & explanation
Correct answer: A. Immediately disclose the defect to the buyer.
As a buyer's agent, the salesperson has a fiduciary duty of disclosure to their client. This means they must inform the buyer of all material facts related to the property, including defects, that could influence the buyer's decision.
Why the other options are wrong
- B. While hiring an inspector is good advice, the agent still has an immediate duty to disclose known material facts.
- C. While the seller's agent should be informed, the primary duty is to the salesperson's own client, the buyer.
- D. Withholding material facts from a client is a breach of fiduciary duty and unethical.
Agent's Duty of Disclosure
An agent's fiduciary obligation to reveal all material facts and information pertinent to the transaction to their client.
- Applies to all material facts.
- Must be timely and complete.
- A core fiduciary duty.
Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.