Agency
A Rhode Island buyer's agent represents a buyer in purchasing a property. After closing, the buyer discovers the agent had a personal financial interest in the property. This failure to disclose:
AHas no legal consequence
BConstitutes a breach of fiduciary duty and may give the buyer grounds for rescission or damages✓ Correct
CIs acceptable if the agent's interest was minor
DOnly matters if the buyer paid above market value
Explanation
A licensee's undisclosed personal financial interest in a transaction is a breach of the fiduciary duty of disclosure and loyalty. The buyer may be able to rescind the transaction or sue for damages.
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Key Terms to Know
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 AgentA real estate licensee who represents the buyer's interests in a transaction, owing fiduciary duties to the buyer.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Seller's Agent (Listing Agent)A real estate licensee who represents the seller's interests, markets the property, and owes fiduciary duties to the seller.
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