Allison is a Tennessee affiliate broker representing a seller. Her seller accepts a purchase offer from a buyer, and the contract is fully executed. The contract contains an 'as-is' clause stating the buyer accepts the property in its present condition and the seller makes no warranties. Before closing, Allison learns from the seller that the home's foundation has a serious structural defect that the seller intentionally concealed from the buyer and did not disclose on the Property Condition Disclosure form. The seller instructs Allison to say nothing. Which of the following best describes Allison's obligations under Tennessee law?
Correct Answer
B) Allison must disclose the known material defect to the buyer because Tennessee law requires licensees to disclose adverse material facts regardless of agency relationship or as-is clauses
Under Tennessee law and TREC regulations, a licensed real estate affiliate broker has an independent duty to disclose known adverse material facts to all parties, regardless of agency relationship. This duty is separate from and survives the seller's instruction to remain silent. Furthermore, an 'as-is' clause does not eliminate the seller's or licensee's obligation to disclose known material defects — it merely limits implied warranties. Concealment of a known material defect by a licensee constitutes fraud and grounds for TREC disciplinary action, including license revocation. Allison must disclose the foundation defect to the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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