A real estate salesperson in Boston is preparing a Purchase and Sale Agreement for her buyer client. The buyer wants to include a home inspection contingency. The salesperson knows the seller is anxious to close quickly and suggests omitting the inspection contingency to make the offer more competitive. Under Massachusetts law and regulations, what is the most accurate statement about this situation?
Correct Answer
C) The salesperson violated her fiduciary duty to the buyer by suggesting the omission without fully advising the buyer of the risks involved
Under Massachusetts agency law and 254 CMR 3.00, a salesperson representing a buyer owes fiduciary duties including loyalty, obedience, and full disclosure. Suggesting the omission of a home inspection contingency without fully advising the buyer of the risks — such as purchasing a property with undisclosed defects — constitutes a breach of the duty of loyalty and full disclosure. The salesperson's primary obligation is to protect the buyer's interests, not to make the offer more convenient for the seller.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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