An agent's representative in Victoria discovers that a property they are listing has significant termite damage that the vendor has instructed them not to disclose. What is the representative's ethical and legal obligation?

Q: What is the correct answer to: An agent's representative in Victoria discovers that a property they are listing has significant termite damage that the vendor has instructed them not to disclose. What is the representative's ethical and legal obligation?

The correct answer is Disclose the termite damage to prospective purchasers as concealment would constitute misleading conduct. The representative must disclose the termite damage to prospective purchasers because concealment of known material defects constitutes misleading conduct under the ACL and the Estate Agents Act 1980. Legal obligations override vendor instructions. The representative should advise the vendor of the disclosure obligation and consider withdrawing from the listing if the vendor refuses.

Q: What background knowledge is needed for this Ethics Compliance question?

The tension between client loyalty and legal disclosure obligations is a common ethical challenge in real estate. Victorian law is clear: agents cannot participate in concealing known material defects regardless of client instructions. The ACL, Estate Agents Act, and professional conduct regulations all require honest dealing. Agents who follow illegal vendor instructions share liability for the resulting harm.

Q: What is a good way to remember the answer to this Ethics Compliance question?

Legal obligations ALWAYS override vendor instructions. If concealment is illegal, the agent MUST disclose regardless of what the client wants. When vendor instructions conflict with legal obligations, the law wins. Disclose or withdraw from the listing.

Q: What exam tip applies to this Ethics Compliance question?

When a vendor instructs concealment of a known defect, the correct answer is always to disclose—legal duty overrides client loyalty.

Q: How does this Ethics Compliance concept apply in Australian real estate practice?

A representative discovers extensive termite damage during a pre-listing inspection of a Ringwood home. The vendor insists on keeping it quiet. The representative explains the legal obligation to disclose and advises the vendor to commission repairs. When the vendor refuses to disclose, the agency withdraws from the listing.

Question

Ethics ComplianceVICMEDIUM

An agent's representative in Victoria discovers that a property they are listing has significant termite damage that the vendor has instructed them not to disclose. What is the representative's ethical and legal obligation?

Answer Options

A

Follow the vendor's instructions as the vendor is the client

B

Disclose the termite damage to prospective purchasers as concealment would constitute misleading conduct

C

Suggest the vendor reduce the asking price but say nothing to buyers

D

Refer the buyer to a pest inspector without mentioning the known issue