A New York real estate salesperson is involved in a transaction where the seller explicitly instructs them NOT to disclose a known, non-material defect in the property (e.g., an old, faded paint stain behind a large couch). What is the salesperson's ethical obligation in this situation?
- AFollow the seller's instruction, as it's a non-material defect.
- BDisclose the defect to potential buyers, prioritizing honesty over obedience.
- CAdvise the seller that while not material, disclosure is always the best practice.
- DOnly disclose if specifically asked by a potential buyer.
Show answer & explanationAnswer & explanation
Correct answer: A. Follow the seller's instruction, as it's a non-material defect.
In New York, a real estate licensee has a duty of obedience to their client, provided the instruction is legal and ethical. A 'non-material defect' (one that does not affect the property's value, desirability, or safety) does not legally require disclosure, especially if the seller instructs against it. Disclosing it against the seller's wishes would violate the duty of obedience and confidentiality. However, the salesperson should still advise the seller on the benefits of transparency.
Why the other options are wrong
- B. Disclosing against the client's wishes for a non-material defect violates the duty of obedience and confidentiality. Only material defects require overriding client instructions.
- C. While good advice, this option doesn't address the primary ethical obligation when the instruction is given regarding a non-material defect.
- D. Waiting to be asked isn't sufficient; the core issue is the conflict between obedience and disclosure for non-material facts.
Duty of Obedience vs. Disclosure (Non-Material)
For non-material defects, a New York real estate licensee's duty of obedience to their client (to follow lawful instructions) generally outweighs a duty to disclose, as long as the instruction is lawful and ethical.
- Duty of obedience is paramount for lawful instructions.
- Non-material defects do not legally require disclosure in NY.
- Disclosure of material defects overrides obedience.
Memory trick: Non-Material means Obey, Material means Reveal, no delay.