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Practice Of Real EstateTrust_funds_recordkeeping_technology_ethicsMEDIUM

A listing agent discovers that the seller's property has a structural crack in the foundation that the seller has attempted to conceal with cosmetic repairs. The seller instructs the agent not to disclose the issue to buyers. What should the agent do?

Correct Answer

A) Disclose the defect to prospective buyers because known material defects must be disclosed regardless of the seller's wishes, and refuse to participate in concealment

An agent's duty of obedience does not extend to illegal or unethical acts. Concealing known material defects is illegal and unethical. The agent must disclose the defect and, if the seller refuses, should consider withdrawing from the listing.

Answer Options
A
Disclose the defect to prospective buyers because known material defects must be disclosed regardless of the seller's wishes, and refuse to participate in concealment
B
Reduce the listing price by 10 percent to account for the defect without disclosing it
C
Say nothing and let the buyer's inspector discover the problem
D
Follow the seller's instructions and conceal the defect because the duty of obedience requires following the client's directions

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Related Topics & Key Terms

Key Terms:

ethicsmaterial_defectdisclosureconcealmentpractice

Related Concepts

Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.

Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.

Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.

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