Agency
An Illinois seller instructs their listing agent not to disclose that the basement floods every spring. The listing agent should:
AFollow the seller's instructions because they are the client
BDisclose the flooding to potential buyers because it is a known material defect✓ Correct
CMake no mention of the basement in any disclosures
DDisclose only if the buyer's inspector finds evidence of flooding
Explanation
Known material defects—including basement flooding—must be disclosed by the listing agent regardless of the seller's instructions. A material defect is any condition that would significantly affect the property's value or the decision of a reasonable buyer.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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.
Math Concepts
State-Specific Concepts
Disclosure RequirementsLicense Law
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