A broker repeats information they received from their seller to a potential buyer. On finding the information is false, the broker is to:
Question & Answer
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inform the seller of the error.
While informing the seller of the error is appropriate, it is insufficient as the sole action. The broker must also ensure the buyer is protected from the false information, which requires broader disclosure beyond just notifying the seller.
inform the buyer of the error.
Informing the buyer addresses part of the issue but is incomplete. The broker has a duty to ensure all parties potentially affected by the misrepresentation are notified, including escrow, who manages the closing process.
inform the escrow officer of the error.
make a note of the misrepresentation in the client file.
Simply documenting the error in the file does not fulfill the broker's active duty to correct the misrepresentation. Documentation is important but doesn't address the immediate need to prevent the false information from affecting the transaction.
Why is this correct?
The correct answer is C because once a broker discovers a material misrepresentation, they have a duty to inform all relevant parties, including escrow, to prevent the misrepresentation from affecting the transaction. This ensures proper disclosure and protects the broker from liability.
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