A seller of property tells their broker the house is connected to the sewer. The broker relays this information to a buyer, who later finds that the house has a septic system in need of repair. The buyer would sue:
Question & Answer
Review the question and all answer choices
the broker and the seller.
CORRECT_ANSWER
no one, as they should have checke
The buyer can sue someone because the broker had a duty to verify the information provided by the seller. It's not the buyer's responsibility to verify every statement made by the broker during a transaction.
the broker only.
d. the owner only.
The buyer would not sue only the owner because while the seller provided false information, the broker repeated it without verification. Brokers have independent duties and can be held liable for their own negligence in verifying material facts.
Why is this correct?
The buyer would sue the broker only because the broker repeated the seller's false statement without verification. Brokers have a duty to exercise reasonable care and verify material facts, especially those affecting property value and functionality. By relaying unconfirmed information, the broker potentially breached this duty.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of agency relationships and disclosure responsibilities in California real estate. The core concept involves determining liability when a broker relays false information from a seller to a buyer. In this scenario, the broker acted as a conduit for the seller's misinformation. California law requires brokers to verify material facts when possible, and misrepresentations about property systems (sewer vs. septic) can significantly affect value and usability. The question challenges students to distinguish between the seller's direct responsibility and the broker's duty in the transaction. The correct answer hinges on recognizing that while the seller made the false statement, the broker repeated it without verification, creating potential liability for the broker. This scenario highlights the importance of due diligence in real estate transactions and the broker's role as a professional intermediary responsible for accurate information flow.
Knowledge Background
Essential context and foundational knowledge
In California real estate transactions, brokers have specific disclosure responsibilities under the California Civil Code and Business and Professions Code. Brokers must exercise reasonable care to verify material facts that are within their means to check. The seller's disclosure obligations primarily involve providing accurate information on transfer disclosure statements, while brokers must independently verify material facts when possible. When a broker repeats false information from a seller without verification, they can be held liable for their own negligence, separate from the seller's liability. This distinction is crucial in determining who can be sued for misrepresentation in real estate transactions.
Think of a broker as a bridge between islands. The seller is on one island, the buyer on another. If the bridge collapses because it was built with faulty information the broker didn't check, the bridge builder (broker) is responsible, not just the person who provided the faulty materials (seller).
When encountering questions about broker liability for misrepresentation, visualize this bridge analogy to remember that brokers have independent responsibility for verifying information they pass on.
When questions involve misrepresentation, ask yourself: Did the broker verify the information? If not, the broker may be liable separately from the seller. Always consider the broker's independent duty to check material facts.
Real World Application
How this concept applies in actual real estate practice
A broker shows a property to buyers and tells them the home is connected to the city sewer system based on what the seller told them. The buyers proceed with the purchase but later discover the property actually has a failing septic system. The septic system repair costs $25,000. The buyers contact their broker, who now faces potential liability because they repeated the seller's statement without verifying it with the local utility or public works department, which would have revealed the septic system.
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