An agent discovers that a property has a history of flooding that was not disclosed by the seller. The agent's duty is to:

Q: What is the correct answer to: An agent discovers that a property has a history of flooding that was not disclosed by the seller. The agent's duty is to:

The correct answer is Require the seller to disclose this information to all potential buyers. Option B is correct because agents have a statutory duty under provincial real estate legislation to ensure material facts are disclosed to all potential buyers. Flooding history is a material fact that significantly affects property value, insurability, and habitability. Under TRESA, RESA, and similar provincial acts, this disclosure obligation exists regardless of which party the agent represents. The agent must require the seller to make proper disclosure to protect all buyers and maintain market integrity.

Q: What background knowledge is needed for this Agency & Professional Ethics question?

Material fact disclosure is governed by provincial real estate legislation including TRESA (Ontario), RESA (Alberta), and similar acts across Canada. Material facts are conditions or circumstances that would influence a reasonable buyer's decision or affect property value. Flooding history qualifies as it impacts insurability, structural integrity, and future risk. Agents must ensure disclosure regardless of their agency relationship - whether representing buyer, seller, or acting as transaction facilitators. This duty protects market integrity and prevents fraudulent concealment of important property information.

Q: What is a good way to remember the answer to this Agency & Professional Ethics question?

Remember FLOOD: Facts that are Latent must be Openly and Objectively Disclosed. Just like a flood affects everyone in the area, material facts must be shared with ALL potential buyers, not just your own client. When you see disclosure questions, think FLOOD - if it's a material fact that could 'flood' a buyer's decision-making process, it must be disclosed to everyone, regardless of agency relationships.

Q: What exam tip applies to this Agency & Professional Ethics question?

For disclosure questions, remember: material facts must ALWAYS be disclosed to ALL parties. Don't get distracted by agency relationships - material fact disclosure trumps client confidentiality.

Q: How does this Agency & Professional Ethics concept apply in real world practice?

An agent listing a basement apartment discovers water damage stains and learns from neighbors about recurring flooding during heavy rains. Even though the seller wants to keep this quiet to maintain property value, the agent must insist on proper disclosure in listing materials and ensure all potential buyers are informed. Failure to do so could result in regulatory discipline, lawsuits, and professional liability claims when buyers discover the flooding post-purchase.

Question

Agency & Professional EthicsDisclosure ObligationsMEDIUM

An agent discovers that a property has a history of flooding that was not disclosed by the seller. The agent's duty is to:

Answer Options

A

Inform only their own client about the flooding history

B

Require the seller to disclose this information to all potential buyers

C

Keep the information confidential to protect the seller's interests

D

Only disclose if directly asked about flooding by a buyer