Delaware licensee Kim is acting as a transaction broker assisting both seller Frank and buyer Helen in the sale of Frank's Sussex County beach cottage. During a property walkthrough, Kim notices that the crawl space has visible signs of water intrusion and wood rot, but Frank has not mentioned this on his disclosure form. Kim says nothing to Helen about what she observed, believing her role as a transaction broker relieves her of the obligation to disclose. Under Delaware law, Kim's conduct is:
Correct Answer
D) Improper, because even a transaction broker in Delaware must disclose known material facts to all parties
Under 24 Del. C. § 2973, even a transaction broker in Delaware owes a duty of honest dealing and disclosure of all known material facts to all parties in the transaction. A transaction broker is not an agent and does not owe fiduciary duties, but the duty to disclose known material facts — such as visible water intrusion and wood rot — survives regardless of the agency relationship type. Kim's silence about the observed defect violates her statutory duties as a transaction broker.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
The fiduciary obligation to protect a client's private information and not disclose it to third parties without permission, surviving even after the agency relationship ends.
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