AgencyIntermediateCalifornia Exam

A buyer's agent discovers that a home has significant foundation problems not disclosed by the seller. What is the agent's duty?

AKeep the information confidential to avoid disrupting the transaction
BDisclose the material defect to the buyer immediatelyCorrect
CReport the defect only if asked directly by the buyer
DNotify the listing agent and let them handle it

Why Disclose the material defect to the buyer immediately Is Correct

Answer B: Disclose the material defect to the buyer immediately

A buyer's agent has a fiduciary duty to disclose all known material facts to their buyer client, including defects discovered that could affect the property's value or desirability.

Exam Tip: Agency

Agency questions are among the most tested on the exam. Focus on the difference between client and customer, and memorize the fiduciary duties (OLD CAR). Watch for questions that try to blur the line between a general agent and a special agent.

Key Agency Terms in This Question

Fiduciary Duty

The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.

Buyer's Agent

A real estate licensee who represents the buyer's interests in a transaction, owing fiduciary duties to the buyer.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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