Agency Relationships and Disclosures Practice Question
Question
A listing agent notices a potential compliance issue involving fiduciary duty of disclosure. What should a California real estate licensee understand? (Item 142)
Answer choices
- A. It applies only to commercial property and never to residential transactions.
- B. Disclose material facts known to the agent that affect the client’s decision.
- C. It is controlled only by local custom rather than by law, contract, or professional duty.
- D. It is valid only when the buyer pays cash and no lender is involved.
Correct Answer
B. Disclose material facts known to the agent that affect the client’s decision.
Explanation
The correct answer is B because fiduciary duty of disclosure requires candidates to disclose material facts known to the agent that affect the client’s decision. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: easy
- Domain: Agency Relationships and Disclosures
- Objective: fiduciary duty of disclosure