During a transaction in Kalamazoo, Michigan, salesperson Priya is representing seller Mitch. Buyer Zoe is unrepresented. Priya discovers that the property is located in a FEMA-designated Special Flood Hazard Area (SFHA), a fact that Mitch did not include in the Seller's Disclosure Statement. Zoe has not asked about flooding. What must Priya do under Michigan law?
Correct Answer
B) Disclose the flood zone designation to Zoe, because it is a material fact that a licensee must disclose to all parties regardless of agency relationship
Under Michigan law, a licensee has a duty to disclose known material facts to all parties in a transaction, regardless of which party the licensee represents. A FEMA Special Flood Hazard Area designation is a material fact because it directly affects the property's insurability, value, and the buyer's financial obligations (mandatory flood insurance). Even though Priya represents Mitch, she cannot withhold a known material fact from Zoe. This duty to disclose material facts to all parties is separate from and in addition to her fiduciary duties to Mitch.
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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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