Salesperson Hoku represents buyer Emi in purchasing a leasehold property on Oahu. The lease has 28 years remaining and contains an escalation clause that doubles the ground rent every 10 years. Hoku provides the agency disclosure form but does not mention the lease term, ground rent amount, or escalation clause, believing these are covered in the seller's HRS Chapter 508D disclosure. Emi later discovers these facts and suffers financial harm. Which of the following most accurately describes Hoku's liability under Hawaii law?
Correct Answer
A) Hoku may be subject to disciplinary action under HRS Chapter 467 for failing to disclose known material facts, regardless of the seller's 508D obligations
Under HRS §467-14 and HAR Title 16, Chapter 99, Hawaii licensees have an independent affirmative duty to disclose known material facts to their clients, separate from and in addition to the seller's obligations under HRS Chapter 508D. Leasehold status, remaining lease term, ground rent amount, and escalation clauses are all material facts unique to Hawaii's leasehold system that directly affect property value and financing. Hoku, as Emi's buyer's agent, had an independent duty to disclose these facts. Relying on the seller's 508D disclosure as a substitute for the licensee's own duty constitutes a violation of HRS Chapter 467 and exposes Hoku to HREC disciplinary action, including license suspension or revocation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal obligation to reveal information that could affect a party's decision to enter into or the terms of a real estate transaction.
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
The fiduciary obligations owed by a listing agent to the seller, including marketing the property, presenting all offers, and protecting the seller's confidential information.
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