Broker Helen at Seacoast Realty in Rhode Island operates a large office with 12 agents. Agent Ben represents seller Victor, and agent Dana represents buyer Wendy in the same transaction. The broker has properly established designated agency with written consent from both Victor and Wendy. During the transaction, Helen (the broker) becomes aware that Victor's property has an unresolved zoning violation that Victor has not disclosed. Under Rhode Island law, what is Helen's obligation as the dual agent broker?
Correct Answer
B) Helen must ensure the zoning violation is disclosed to Wendy because it is a material fact affecting the property, regardless of the designated agency structure
Under Rhode Island law, a material fact affecting the property — such as an unresolved zoning violation — must be disclosed to the buyer. The designated agency structure and the broker's dual agent status do not override the fundamental obligation to disclose material property defects. Helen, as the broker overseeing the transaction, has a supervisory duty and cannot allow a material fact to be concealed from Wendy. The duty to disclose material property conditions runs independently of the agency structure and is reinforced by both § 5-20.6 and the Seller's Disclosure Act (§ 5-20.8).
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by the conduct or actions of the parties rather than by a written or oral agreement.
The legal obligation to reveal information that could affect a party's decision to enter into or the terms of a real estate transaction.
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
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