An agent learns that their client's property has undisclosed water damage in the basement. What is the agent's ethical obligation?
Correct Answer
A) Advise the client to disclose; withdraw if they refuse
While agents owe loyalty to their clients, they cannot participate in fraudulent misrepresentation. The agent must advise the client to disclose material defects and should consider withdrawing from the representation if the client refuses to make proper disclosure.
Why This Is the Correct Answer
Option A correctly balances the agent's fiduciary duty to the client with their professional and legal obligations. Under TRESA and provincial regulations, agents cannot participate in fraudulent non-disclosure of material defects. The agent must first advise the client of their disclosure obligations and the risks of non-disclosure. If the client refuses to disclose the water damage, the agent should withdraw from representation to avoid participating in potential fraud while maintaining professional integrity.
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An agent learns that their buyer client is pre-approved for $500,000 but is only looking at homes under $400,000. The client has not authorized sharing any financial details. The seller's agent asks about the buyer's maximum budget. How should the agent respond?
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An agent representing a buyer learns confidential information about the seller's motivation to sell quickly due to financial hardship. How should this information be handled?