Salesperson Rita at Cambridge Realty in Massachusetts is acting as a dual agent with written consent from both buyer Steve and seller Gwen. After the purchase and sale agreement is signed, Steve discovers through his own independent research that the property has a history of flooding that Gwen did not disclose and that Rita was unaware of. Steve sues Rita and Cambridge Realty under MGL Chapter 93A, claiming that the dual agency relationship and Rita's failure to investigate constituted an unfair or deceptive practice. Which of the following most accurately describes Rita's potential liability under Massachusetts law?
Correct Answer
D) Rita may have liability under Chapter 93A if she failed to exercise reasonable care to discover material defects, regardless of her lack of actual knowledge
Under MGL Chapter 93A, real estate licensees can be held liable not only for active misrepresentation but also for failing to exercise reasonable care in discovering and disclosing material defects. Even if Rita was genuinely unaware of the flooding history, a court may find that a reasonably competent licensee acting in a dual agency capacity should have inquired about the property's condition more thoroughly. Chapter 93A imposes a standard of reasonable care, and failure to meet that standard — even without actual knowledge — can constitute an unfair or deceptive practice. Additionally, Chapter 93A allows for double or treble damages and attorney's fees, which significantly expands potential liability beyond a simple refund of commission.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
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