Agent Rob is affiliated with Midlands Realty and represents buyer Claire in her purchase of a home listed by a different brokerage. During due diligence, Rob discovers that the property has a significant foundation issue that the seller did not disclose. The seller's agent, knowing of the issue, also failed to disclose it. Under South Carolina agency law, Rob's duty to Claire requires him to:
Correct Answer
A) Disclose the foundation issue to Claire and advise her to consult an expert, even though it may kill the deal
Rob owes Claire the fiduciary duty of disclosure — he must reveal all material information he knows that could affect her decision to purchase the property, including the foundation issue. A significant foundation defect is clearly a material adverse fact that Rob must disclose to his client immediately, regardless of whether it might jeopardize the transaction. Rob should also advise Claire to consult a structural engineer or other expert. Under S.C. Code Ann. § 40-57-350, the duty of disclosure to the client cannot be subordinated to transaction convenience.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
The fiduciary obligation to protect a client's private information and not disclose it to third parties without permission, surviving even after the agency relationship ends.
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
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