Broker Lewis in Oklahoma City is representing seller Hoffman in the sale of a four-unit residential rental property. During due diligence, buyer Anderson discovers through independent research that the property has a history of flooding not disclosed by Hoffman. Broker Lewis was unaware of the flooding history. Anderson demands that Broker Lewis be held responsible for failing to disclose the flooding. Under Oklahoma agency disclosure law, which statement best describes Broker Lewis's liability?
Correct Answer
C) Broker Lewis may be liable if it can be shown that Lewis knew or should have known about the flooding history through reasonable diligence
Under Oklahoma agency law, a seller's agent has a duty to disclose material facts that the agent knows or should have known through the exercise of reasonable diligence. If Broker Lewis had no actual or constructive knowledge of the flooding history, liability is not automatic. However, if a reasonable investigation — such as reviewing public records, prior disclosure statements, or visible evidence — would have revealed the flooding history, Lewis could be found to have breached the duty of reasonable diligence. The standard is actual or constructive knowledge, not strict liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
An agency relationship created by the conduct or actions of the parties rather than by a written or oral agreement.
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