New York Real Estate Salesperson ExaminationLaws of AgencyEasy
A real estate salesperson is representing a buyer. The salesperson uncovers information that a new, high-speed rail line is planned to run directly behind the property the buyer is interested in, potentially increasing noise and decreasing property value. What is the salesperson's primary obligation regarding this information?
- ATo keep the information confidential, as it might deter the buyer from purchasing the property.
- BTo disclose the information only if the buyer specifically asks about future development plans.
- CTo advise the buyer to conduct their own independent research on future development.
- DTo disclose this material fact to the buyer immediately.
Show answer & explanationAnswer & explanation
Correct answer: D. To disclose this material fact to the buyer immediately.
As a fiduciary, a real estate salesperson has a duty to disclose all material facts to their client that could influence the client's decision, even if unfavorable. This includes information about planned infrastructure projects.
Why the other options are wrong
- A. Keeping material information confidential from a client is a breach of fiduciary duty.
- B. The duty of disclosure is proactive; the agent must disclose material facts whether asked or not.
- C. While advising independent research is good practice, it does not absolve the agent of their primary duty to disclose known material facts.
Agent's Duty of Disclosure
The fiduciary duty of a real estate agent to reveal all material facts relevant to a transaction to their client.
- Applies to all material facts that could influence the client's decision.
- Disclosure must be prompt and complete.
- Failure to disclose can lead to legal liability and license revocation.
Memory trick: OLD CAR is how agents serve their clients well.