Agent Kim in Kentucky is showing properties to buyer Jackson. During a showing, Jackson mentions that he recently went through a bankruptcy and is concerned about qualifying for financing. Agent Kim is a seller's agent on all the properties being shown. What is Agent Kim's duty to Jackson regarding this bankruptcy information?
Correct Answer
D) Disclose the information to the sellers because it is a material fact affecting the transaction
Under Kentucky agency law consistent with KRS Chapter 324 and 201 KAR 11:121, Agent Kim is a seller's agent and owes fiduciary duties to the sellers, not to Jackson. Jackson is a customer, not a client. A buyer's bankruptcy history is a material fact that could affect the sellers' decision to accept an offer or negotiate terms. As the sellers' agent, Agent Kim has a duty to disclose material facts to her clients (the sellers), including information about the buyer's financial condition that could affect the transaction.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
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