What background knowledge is needed for this Agency question?

New Hampshire's material disclosure obligations for buyer's agents under RSA 331-A:25-b were enacted against the backdrop of a broader national trend in the 1990s toward buyer representation, which created a new set of fiduciary duties that had not previously existed when all agents were presumed to represent sellers. The NH legislature recognized that buyers needed an agent who would actively investigate and disclose adverse information, not simply facilitate a transaction. The Consumer Protection Act, RSA Chapter 358-A, provides an additional layer of protection by making concealment of material facts in a consumer transaction an unfair or deceptive trade practice, exposing agents who participate in concealment to civil liability beyond just license discipline.

What is a good way to remember the answer to this Agency question?

Use the acronym SHIELD to remember a buyer's agent's disclosure duty: 'She Has an Ironclad Ethical Legal Duty.' Visualize Melissa holding up a shield between her buyers and a harmful secret — the shield represents her fiduciary duty, and her job is to make sure no material fact gets past that shield without her buyers knowing about it. The shield does not lower just because the other side asks nicely or because the deal might fall apart.

What exam tip applies to this Agency question?

When a question involves a buyer's agent discovering a material defect, the correct answer will almost always involve immediate disclosure to the buyer clients — never concealment, never delay until after closing, and never deferring to the NHREC as the first step. The exam tests whether you understand that the fiduciary duty of disclosure is owed directly to the client and must be acted upon immediately upon discovery. Any answer that suggests completing the transaction first and dealing with the defect afterward is a trap designed to catch test-takers who confuse completing the deal with serving the client.

How does this Agency concept apply in real world practice?

Melissa's buyers, the Garcias, are purchasing a lakeside property for $620,000 and plan to use it as a primary residence. During a walkthrough, Melissa notices the telltale signs of a failing septic system — sewage odor near the leach field and a soft, saturated area in the yard. The seller's agent pulls Melissa aside and says, 'The seller knows about it but doesn't want to deal with it — just let the buyers find out after closing and they can negotiate a repair credit then.' Melissa immediately tells the Garcias about what she observed, recommends they request a septic inspection before proceeding, and documents her disclosure in writing. By doing so, she protects her clients from a potentially $30,000 to $50,000 repair surprise and shields herself from liability under both RSA 331-A and RSA 358-A.

AgencyAgency_typesHARD

Agent Melissa is a licensed NH salesperson representing buyer clients who are purchasing a property. During the transaction, Melissa discovers that the seller's property has a failing septic system — a material defect that the seller has not disclosed. The seller's agent asks Melissa to keep this information confidential until after closing to avoid jeopardizing the deal. What is Melissa's correct course of action under NH agency law?

Correct Answer

B) Melissa should disclose the failing septic system to her buyer clients because she owes them a fiduciary duty to disclose all known material facts affecting the property

As a buyer's agent under RSA 331-A:25-b, Melissa owes fiduciary duties to her buyer clients, including the duty to disclose all known material facts that affect the property's value or the buyer's decision to purchase. A failing septic system is a known material defect. Melissa must disclose this information to her clients regardless of the seller's agent's request for confidentiality. Agreeing to conceal a material defect would also expose Melissa to liability under RSA Chapter 358-A (Consumer Protection Act) and could constitute a violation of her license law obligations.

Answer Options

Melissa should keep the information confidential as requested because her duty of loyalty to her buyer clients requires her to complete the transaction

Melissa should disclose the failing septic system to her buyer clients because she owes them a fiduciary duty to disclose all known material facts affecting the property

Melissa should report the failing septic system only to the NHREC and take no further action until the Commission investigates

Melissa should advise her buyer clients to close the transaction and then pursue the seller for damages after closing

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Scope of Authority

The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.

Seller Agent Duties

The fiduciary obligations owed by a listing agent to the seller, including marketing the property, presenting all offers, and protecting the seller's confidential information.

Single Agency

A practice where the agent or brokerage represents only one party in a transaction — either the buyer or the seller, but never both.

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