Sarah is an affiliate broker in Tennessee representing the Garcias as their buyer's agent. During a showing, Sarah notices that the basement has visible water stains and a musty odor, but the seller's disclosure form does not mention any moisture issues. The seller's listing agent tells Sarah not to mention it because 'it was just a one-time leak.' What is Sarah's fiduciary duty in this situation?
Correct Answer
B) Disclose the observed conditions to the Garcias as material facts that may affect their decision
Under Tenn. Code Ann. § 62-13-401 et seq., a buyer's agent owes the client the fiduciary duties of disclosure and loyalty. Sarah must disclose all known material facts — including observable conditions like water stains and musty odors — to her buyer clients, the Garcias, regardless of what the listing agent says. These conditions could materially affect the buyers' decision and their ability to negotiate.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
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