Humber/Ontario Real Estate Course 4 Exam Practice

Salesperson Adams is listing a cottage with an encroaching access road. The seller wants the encroachment omitted from the listing and Adams agrees. Which of the following is correct?

1. Adams must respect the seller's instructions and omit the encroachment from the listing.

2. Adams is omitting critical information which violates ethical guidelines.

3. As no dispute exists, the encroachment is not a material fact requiring disclosure.

4. Disclosure is not needed as the buyer has the duty to investigate.

5. No disclosure is necessary given that the issue has never caused problems.

6. Omission of such detail is permissible under client confidentiality obligations.

The correct answer is: Adams is omitting critical information which violates ethical guidelines.

In this scenario, the best choice is based on the ethical obligations of real estate professionals. Salesperson Adams agreeing to omit the encroachment information from the listing fundamentally overlooks the ethical principle of transparency, which is essential in real estate transactions. Omitting critical information, such as an encroaching access road, can lead to misleading the buyer about the property’s true state, which in turn violates ethical guidelines established to promote honesty and integrity in the profession. Disclosures concerning encroachments are significant because they can affect the value and usability of the property. Real estate professionals are expected to act in their clients' best interests while also adhering to legal and ethical standards, including full disclosure of important property information that might influence a buyer's decision. The other options suggest various misunderstandings. There can be disputes about encroachment, making it a material fact that requires disclosure regardless of the seller's wishes. The notion that buyers should conduct their own investigations does not absolve sellers of the responsibility to disclose known issues. Similarly, the idea that previous lack of problems absolves the need for disclosure fails to acknowledge that a potential buyer deserves complete information to make an informed decision. Lastly, while client confidentiality obligations are important, they do not override the obligation to disclose