Agency
An Illinois seller's agent discovers that the property has a water intrusion problem not disclosed on the property disclosure form. The agent must:
AComplete the transaction without mentioning it to protect the seller's interests
BDisclose this known material defect to all parties, including prospective buyers✓ Correct
CAdvise the seller to fix the problem before disclosing it
DOnly disclose if the buyer specifically asks about water problems
Explanation
Even a seller's agent must disclose known material defects to all parties. Water intrusion is a material defect that can affect the property's value, habitability, and the buyer's decision to purchase.
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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.
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.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Math Concepts
State-Specific Concepts
Disclosure Requirements
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