Licensee Rachel represents seller Tom in the sale of his Montgomery home. Prospective buyer Wendy contacts Rachel and, after Rachel discloses her representation of Tom in writing, Wendy states she does not want any representation and prefers to work directly with Rachel on her own behalf. Rachel continues to assist Wendy as a transaction broker. Later, Wendy alleges Rachel failed to disclose a material defect known to Rachel but not to Tom. Under Alabama Agency Law, which statement most accurately describes Rachel's disclosure obligations as a transaction broker?
Correct Answer
B) Rachel was required to disclose all known material facts to Wendy regardless of her transaction broker status
Under Alabama Agency Law, even in a transaction brokerage arrangement, licensees retain a duty to disclose all known material facts to all parties. Transaction brokerage is a non-agency role, but it does not eliminate the licensee's fundamental obligation of honest dealing and material fact disclosure to both the buyer and the seller. Rachel's knowledge of a material defect — regardless of whether Tom knew about it — obligated her to disclose it to Wendy under Code of Alabama §34-27-81 et seq. and AREC rules.
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Under Alabama Agency Law (Code of Alabama §34-27-81 et seq.), all of the following statements about agency disclosure requirements are correct EXCEPT:
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