EnvironmentalIntermediateCalifornia Exam

When a seller knows of a material defect related to an environmental hazard, failing to disclose it to a buyer may result in:

AOnly a civil fine from the DRE, per standard environmental compliance procedure

BRescission of the sale, damages, and potential license disciplineCorrect

CAutomatic loss of the right to sell real estate, under California environmental disclosure law

DNo liability if the buyer had an inspection, as required under standard hazard disclosure practice

Why Rescission of the sale, damages, and potential license discipline Is Correct

Answer B: Rescission of the sale, damages, and potential license discipline

Failure to disclose known material facts — including environmental hazards — can expose the seller to rescission of the contract, compensatory and punitive damages, and for licensees, DRE license discipline including suspension or revocation.

Exam Tip: Environmental

Environmental questions test knowledge of hazards like asbestos, lead-based paint, radon, and mold. Know the disclosure requirements and when a professional inspection is required. CERCLA liability is strict, joint, and several.

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Key Terms to Know

Listing Agreement

A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

Math Concepts

Profit & Loss

State-Specific Concepts

DRE Regulation

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