An Alberta associate acting as a transaction broker discovers that the property has a material latent defect that neither party is aware of. What is the associate's obligation under RECA rules?
Correct Answer
B) The associate must disclose the material latent defect to both parties
Under RECA Rules s. 59(4)(e)(i), a brokerage acting under a transaction brokerage agreement must disclose to the buyer all material latent defects it knows of. Section 59(4)(a) also requires it to treat both parties even-handedly, and any information given to one party is disclosed to the other, so both the buyer and the seller learn of the defect.
Why This Is the Correct Answer
The rule that governs transaction brokerage, RECA Rules s. 59(4)(e)(i), requires disclosure of all known material latent defects to the buyer. Because s. 59(4)(a) requires even-handed treatment in which information given to one party is disclosed to the other, the seller is told as well. Disclosing to both parties is the correct course.
Why the Other Options Are Wrong
Deep Analysis of This Agency & Professional Ethics Question
Background Knowledge for Agency & Professional Ethics
Memory Technique
Exam Tip for Agency & Professional Ethics
Real World Application in Agency & Professional Ethics
Common Mistakes to Avoid on Agency & Professional Ethics Questions
Key Terms
More Agency & Professional Ethics Questions
A listing agent learns that the basement had water damage years ago that was fully repaired. The seller has no legal obligation to disclose it and refuses to mention it in the listing. What is the agent's best course of action?
Under the RECA Rules, a brokerage practising common law agency lists a seller's home, and one of its buyer clients wants to buy that home. How must the brokerage proceed?
Which of the following scenarios represents a conflict of interest that must be disclosed?
A buyer's agent learns that the seller is motivated to sell quickly due to financial difficulties. What should the agent do with this information?
An agent learns that a major development project will be announced near their client's property, likely increasing its value significantly. The client wants to list immediately at current market value. What is the agent's ethical obligation?
- → Which of the following best describes the duty of confidentiality owed by a real estate agent?
- → What information must an agent disclose to a buyer client about a property's condition?
- → A real estate agent discovers that a property they are showing has a known foundation issue that the seller has not disclosed. What should the agent do?
- → In a complex commercial transaction, a real estate professional discovers information that creates competing duties between their fiduciary obligation to their client and their duty to disclose material facts to other parties. How should this conflict be resolved?
- → 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?
- → A buyer's agent learns that their client has been pre-approved for a mortgage up to $500,000, but the client instructs them to only look at properties under $400,000. What should the agent do with this information?
- → A listing agent learns that the home was once used as a marijuana grow operation and has since been fully remediated. The seller's lawyer confirms the seller has no legal obligation to disclose this, and the seller does not want it disclosed. What should the listing agent do?
- → An Ontario salesperson represents a seller who receives two identical offers, one of them from the salesperson's spouse. The seller does not know about the relationship. What does the Code of Ethics require if the salesperson is to keep acting for the seller?
- → What is 'designated agency' in the context of Alberta real estate?
- → A buyer tells their Ontario salesperson that the seller is facing foreclosure and must sell quickly. How should the salesperson handle this information?
People Also Study
Real Property Law
60 questions
Contracts & Agreements
60 questions
Mortgage & Real Estate Finance
60 questions
Land Use & Planning
50 questions
Related Study Resources
Helpful Resources
Previous Question
Which situation would create a conflict of interest that must be disclosed to clients?
Next Question
An Alberta brokerage is using a designated agency model. During a transaction, the designated buyer's associate inadvertently shares their client's maximum price with the designated seller's associate within the same brokerage. What is the consequence?