An Iowa listing agent, Kevin, represents seller Patricia in the sale of a residential property. Patricia tells Kevin that the basement has experienced water intrusion twice in the past two years but insists that Kevin not mention it to buyers because she had it 'fixed.' Patricia delivers a Seller Disclosure Statement that omits this history. A buyer, David, purchases the property and later discovers the recurring water problem. Under Iowa Code Chapter 558A and Iowa Code Chapter 543B, which of the following best describes Kevin's legal exposure?
Correct Answer
D) Kevin may face disciplinary action and civil liability because licensees have an independent duty to disclose known material facts that are not included in the seller's disclosure statement
Under Iowa Code Chapter 543B, real estate licensees owe a duty to all parties in a transaction to disclose known material facts that could affect the transaction, independent of the seller's disclosure statement obligations under Chapter 558A. Water intrusion history is a material fact that Kevin knew about. Knowingly allowing a materially incomplete disclosure to be presented to a buyer exposes Kevin to disciplinary action by the Iowa Real Estate Commission under Chapter 543B and potential civil liability. The seller's disclosure form does not insulate a licensee who has independent knowledge of a material defect.
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Related Topics & Key Terms
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Related Concepts
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.
HOA disclosure requires informing buyers about the existence, rules, fees, financial health, and restrictions of a homeowners association governing the property. This information helps buyers understand their obligations before purchase.
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