Broker Tiffany in Indiana is representing buyer Scott under a written buyer agency agreement. While showing Scott a property, Tiffany notices visible water stains on the basement ceiling, which the seller has not disclosed. The listing agent tells Tiffany the stains are old and were repaired years ago. Scott is very excited about the property and says he does not want to know about any problems. Under Indiana law, what is Tiffany's obligation?
Correct Answer
B) Disclose the water stains to Scott and advise him to investigate further, regardless of his stated preference
Under IC 25-34.1-10, Tiffany owes Scott a fiduciary duty of disclosure, which requires her to disclose all known material facts that could affect his decision. Visible water stains are a potential material defect. A buyer cannot waive the broker's duty to disclose material facts; this is a non-waivable fiduciary obligation. Tiffany must inform Scott of the water stains and recommend he investigate further, regardless of his stated preference not to hear about problems.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
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.
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