A California listing agent discovers that the property they are marketing has a material defect that the seller has asked the agent not to disclose. The defect could significantly affect the buyer's decision. Under California ethical standards, what must the agent do?
Correct Answer
A) Disclose the defect to prospective buyers because the duty of honest dealing overrides confidentiality for material defects
Under California law (Cal. Civil Code §2079, §1102.6), the agent's duty to disclose known material defects to buyers overrides the seller's request for confidentiality. While the agent owes fiduciary duties to the seller, concealing material defects from buyers violates both statutory law and ethical obligations. If the seller refuses to allow disclosure, the agent should withdraw from the listing.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Death on property disclosure addresses whether sellers must inform buyers about deaths that occurred on the property, including natural deaths, suicides, and murders. Requirements vary significantly by state.
Environmental hazards disclosure involves informing buyers about environmental contamination or hazards affecting or potentially affecting a property, including underground storage tanks, contaminated soil, hazardous waste, and proximity to Superfund sites.
Flood zone disclosure requires informing buyers whether a property is located in a designated flood zone as mapped by FEMA. Properties in high-risk flood zones may require mandatory flood insurance.
More Practice Of Real Estate Disclosures Questions
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- → A California salesperson's personal real estate blog states, 'I closed 50 transactions last year!' The actual number was 32. A competing agent reports this to the DRE. What is the most likely regulatory outcome?
- → A seller is selling a condominium in a California common interest development (CID). In addition to the TDS, which disclosure package is the seller required to provide under California Civil Code §4525?
- → A seller completing the Transfer Disclosure Statement in California must disclose various property conditions. All of the following must be disclosed on the TDS EXCEPT:
- → Under California Civil Code §1102, what is the primary purpose of the Transfer Disclosure Statement (TDS) in a residential sale?
- → A California listing agent receives a third-party NHD report confirming the property is in a Seismic Hazard Zone. The report also includes a supplemental notation indicating the property lies within a tsunami inundation zone per California Geological Survey mapping. The seller asks the agent whether the tsunami risk must be disclosed to the buyer. Which of the following is the most accurate statement of the agent's disclosure obligation under current California law (effective January 1, 2025)?
- → A property in a California Mello-Roos district has a base Proposition 13 property tax of 1% on its assessed value of $600,000, plus a Mello-Roos special tax of $3,200 per year. What is the total annual property tax bill for this property?
- → A California buyer's agent conducts a visual inspection of a property and observes extensive, recently applied caulking around all window frames and along the base of the exterior walls. What is the buyer's agent's most appropriate next step?
- → A California buyer's agent conducts a visual inspection and notices that the property's water heater is not strapped to the wall as required by California law for seismic safety. Under California Health and Safety Code §19211, water heaters must be braced. What should the buyer's agent do?
- → Tenant died in apartment unit two years ago. Landlord discloses death to prospective tenant, mentioning AIDS-related cause. Which statement is correct?
- → A homeowner in a California Mello-Roos district wants to pay off the remaining Mello-Roos bond obligation on their property. The outstanding principal balance of the bonds allocated to the property is $35,000, and the CFD charges a 3% prepayment premium. What is the total payoff amount?
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