Broker Elena in Nebraska represents seller Frank on a rural property near a Natural Resources District (NRD) groundwater management area. Buyer Grace is interested in the property and asks Elena whether the NRD designation affects her ability to drill a new irrigation well. Elena, representing Frank, tells Grace that the NRD restrictions are 'minor and won't affect your farming plans' without verifying this claim. The NRD has in fact imposed a moratorium on new well permits in that area. Under Nebraska agency law and state-specific disclosure obligations, which of the following best describes Elena's liability?
Correct Answer
D) Elena may be liable for misrepresentation to Grace and for failing to disclose a material fact that affects the property's value and use
Under Nebraska law, a licensee — even when representing the seller — has an affirmative duty not to make false or misleading statements to any party in a transaction, including buyers who are customers rather than clients. Elena's statement that NRD restrictions are 'minor and won't affect your farming plans' is an affirmative misrepresentation of a material fact: the NRD moratorium on new well permits directly affects the property's agricultural utility and value. Nebraska's NRD system is a state-specific institution with significant impact on rural and agricultural property use. Nebraska licensees have a duty to disclose known material facts and must not make false statements to any party. Elena's failure to verify the NRD status before making that representation exposes her to liability for misrepresentation, regardless of her agency relationship with Frank.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Agency Question
Background Knowledge for Agency
Real World Application in Agency
Common Mistakes to Avoid on Agency Questions
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.
More Agency Questions
For the Wyoming salesperson state portion, the membership of the Wyoming Real Estate Commission is tested. Which statement is correct?
A Wyoming licensee is reviewing a Commission appointment is reviewed for licensee-experience requirements. What is the best answer?
A West Virginia salesperson is asked about a WV licensee fails to disclose on the Commission agency relationship form whether the licensee represents the seller, buyer, or both. What is the best answer?
In West Virginia, a WV licensee fails to disclose on the Commission agency relationship form whether the licensee represents the seller, buyer, or both. Which statement is correct?
In Vermont, a licensee owes fiduciary duties to a client. Which statement is correct?
- → A Vermont licensee is asked about a designated agency firm appoints separate agents for buyer and seller. What is the best answer?
- → In Vermont, a licensee has substantial contact with an unrepresented person before a showing. Which statement is correct?
- → In Vermont, a firm has not elected designated agency. Which statement is correct?
- → In Vermont, a designated agency firm appoints separate agents for buyer and seller. Which statement is correct?
- → A Vermont licensee is asked about a licensee has substantial contact with an unrepresented person before a showing. What is the best answer?
- → In Vermont, a seller receives another offer before closing. Which statement is correct?
- → In Vermont, a designated agency firm appoints or changes a designated agent. Which statement is correct?
- → A Vermont licensee is asked about a firm has not elected designated agency. What is the best answer?
- → In Vermont, a brokerage hosts an open house for unrepresented visitors. Which statement is correct?
- → In Vermont, a licensee buys or sells property on the licensee's own account. Which statement is correct?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Related Articles
Real Estate Exam Practice Questions by Topic (2026): Free Sets for Contracts, Agency, Financing
Get topic-based real estate exam practice sets and a simple sequence to move from learning to timed mocks.
Real Estate Exam Topics (2026): High-Yield Areas + Common Traps (Contracts, Agency, Financing, Fair Housing)
Learn the highest-frequency real estate exam topics and the traps that cause most wrong answers—plus how to study them.
Real Estate Exam Agency & Fiduciary Duties (2026): Scenarios + Practice Questions
Master agency relationships and fiduciary duties using scenario patterns and practice questions built for exam wording.