Agency
An Alabama listing agent discovers a material defect in the property. The seller instructs the agent to keep this secret. The agent should:
AFollow the seller's instructions since the seller is the client
BDisclose the defect to buyers because material defects must always be disclosed✓ Correct
CKeep the secret to maintain loyalty to the seller
DCancel the listing immediately
Explanation
Material defects must be disclosed to buyers regardless of the seller's instructions. An agent cannot follow instructions that require violating the law or harming third parties.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
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