What must a licensee disclose to a potential purchaser when they have a personal interest in the property being sold?
Correct Answer
B) The nature and extent of their interest, disclosed in writing
Section 136 of the Real Estate Agents Act 2008 requires a licensee to disclose in writing to every prospective party whether the licensee, or a person related to them, may benefit financially from the transaction. The disclosure must be made before or when contractual documents are provided, so a licensee with an interest in the property must tell purchasers what it is, in writing.
Why This Is the Correct Answer
Section 136 requires a licensee to disclose in writing to every prospective party whether the licensee, or a related person, may benefit financially from the transaction, before or when contractual documents are provided. A licensee with an interest in the property must make clear what that interest is.
Why the Other Options Are Wrong
Option A: Only the price the licensee originally paid for the property
The purchase price alone does not tell a purchaser that the licensee stands to benefit financially from the sale.
Option C: Only the fact that they work for the agency that is marketing it
Disclosing employment says nothing about the licensee's own financial stake, which section 136 requires to be disclosed.
Option D: Nothing, provided the vendor client has agreed to the arrangement
The vendor's agreement cannot waive the licensee's duty to disclose to purchasers under section 136.
Deep Analysis of This Agency Practice Question
Section 136 targets the customer's blind spot: a purchaser dealing with a licensee assumes the licensee's only stake is ordinary commission. Where the licensee owns part of the property, or a relative does, that assumption is wrong, and the purchaser is entitled to know in writing. Section 136(4) makes clear that ordinary commission alone is not a benefit that has to be disclosed.
Background Knowledge for Agency Practice
Sections 134 to 137 of the Real Estate Agents Act 2008 deal with licensee interests. Section 136 covers disclosure of financial benefits to prospective parties; section 137 defines 'licensee' (including officers and shareholders of a company agent) and 'related person' for these sections. Section 137 itself imposes no duty; it is a definitions section.
Memory Technique
Licensee stake in the sale? Write it down and hand it over no later than the contract documents.
Use it for any question about a licensee, or a relative, standing to gain from a sale beyond ordinary commission.
Exam Tip for Agency Practice
Section 136 (not 137) is the disclosure duty; section 137 only defines who counts as related.
Real World Application in Agency Practice
A licensee co-owns a rental property with her sister and lists it through her agency. Every prospective buyer is given a written statement that the licensee and her sister own the property, before any sale and purchase agreement is handed over.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking partial disclosure is sufficient
- •Believing vendor consent can waive disclosure requirements
- •Confusing general agency disclosure with specific personal interest disclosure
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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