Broker Hana represents buyer Kai in purchasing a single-family home in Maui. During the transaction, Hana discovers that the seller has failed to disclose a known encroachment on the property boundary. The seller instructs Hana not to mention it to Kai. What must Hana do under Hawaii law?
Correct Answer
A) Disclose the encroachment to Kai because it is a material fact that Hana has a duty to reveal to her client
Under HRS Chapter 467 and HAR Title 16, Chapter 99, a licensee representing a buyer has a fiduciary duty to disclose all known material facts to that client, including facts that adversely affect the property's value or desirability. A boundary encroachment is clearly a material fact. Hana represents Kai — not the seller — so the seller's instruction to remain silent does not override Hana's duty to her own client. Complying with the seller's instruction would constitute a violation of HRS Chapter 467.
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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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