Robert is an affiliate broker in Tennessee representing a seller whose home is located near a former dry-cleaning facility. Robert is aware from public records that the site has documented soil and groundwater contamination, but the seller claims to have no personal knowledge of any impact on the subject property, and no testing has been done on the subject property itself. The seller refuses to mention the neighboring contamination on the Property Condition Disclosure form. What is Robert's most appropriate course of action under Tennessee law?
Correct Answer
B) Robert should advise the seller that the known off-site contamination is likely a material fact that must be disclosed and recommend the seller consult legal counsel, while also ensuring the information is not withheld from prospective buyers.
Under Tennessee law, a licensee has a duty not to misrepresent or conceal material facts (Tenn. Code Ann. § 62-13-403). Documented off-site contamination from a neighboring facility that could affect the subject property's value or desirability is a material fact. Even if the seller claims no personal knowledge of direct impact, the publicly documented contamination is information Robert is aware of. The proper course is to advise the seller of the potential disclosure obligation, recommend legal counsel, and ensure that material information known to the licensee is not actively concealed from buyers. Robert must balance his duties to the seller client with his duty of honesty to all parties.
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Related Topics & Key Terms
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Related Concepts
Environmental hazards disclosure involves informing buyers about environmental contamination or hazards affecting or potentially affecting a property, including underground storage tanks, contaminated soil, hazardous waste, and proximity to Superfund sites.
Flood zone disclosure requires informing buyers whether a property is located in a designated flood zone as mapped by FEMA. Properties in high-risk flood zones may require mandatory flood insurance.
HOA disclosure requires informing buyers about the existence, rules, fees, financial health, and restrictions of a homeowners association governing the property. This information helps buyers understand their obligations before purchase.
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