Carol is selling her home in Roanoke, Virginia, and has provided a disclaimer statement under the Virginia Residential Property Disclosure Act. Before closing, Carol's listing agent, Derek, learns from a neighbor that the property is located in a documented flood zone, a fact that Carol was unaware of. Derek does not disclose this information to the buyer. After closing, the buyer discovers the flood zone designation and suffers significant financial loss. Which of the following most accurately describes the legal exposure of both Carol and Derek?

Correct Answer

A) Carol has no liability because she was unaware of the flood zone, but Derek may face disciplinary action and civil liability for failing to disclose a known material adverse fact to the buyer

Under the RPDA (Va. Code § 55.1-700 et seq.), Carol's disclaimer statement is valid because she was genuinely unaware of the flood zone designation — the disclaimer protects sellers who have no knowledge of a condition. However, Derek, as a licensed agent, has an independent duty under Virginia license law (Va. Code § 54.1-2130 et seq.) and VREB regulations (18 VAC 135-20) to disclose known material adverse facts to all parties, regardless of the source of that information. Once Derek learned of the flood zone from the neighbor, he had a duty to disclose it to the buyer. His failure to do so exposes him to VREB disciplinary action and potential civil liability.