Chapter 3- Mandatory Disclosures

Question 1

Material facts

Answer 1

Is any fact, if disclosed, could affect the decision of an entity in completing the transaction. (Any fact that would influence the buyer to purchase or not purchase a home)

Question 2

Full disclosure will…

Answer 2

Protect the principals (buyers and sellers)
Establish and build trust and confidence between the licensee and principals
Satisfy the law

Question 3

The agent must disclose but also make certain principal understands the info and importance of info disclosed

Question 4

Certain disclosures are mandated

Question 5

Single agency

Answer 5

Representing only one principal

Question 6

Dual agency

Answer 6

Representing both principals. Must disclose and get written consent.

Question 7

Fiduciary responsibility (to the principal)

Answer 7

Highest, good faith and loyalty

Question 8

Fiduciary responsibility

Answer 8

The agent must be loyal to the principal. It’s one of good faith and trust.

Question 9

Duty of agent to principal: Obedience

Answer 9

The agent must obey the principals lawful directions. A principal direction to discriminate or fail to disclose material fact could not be followed and the principal should be so advised.

Question 10

Duty of trust

Answer 10

Prohibits agents from revealing confidential information about the principal to others without the consent of the principal.

Question 11

The fiduciary duty of the agent includes full disclosure of material facts discovered by the agent that the principal would reasonably want to know in making decisions.

Question 12

For 1-4 unit residential properties you have an actual fit yo conduct a reasonably diligent visual inspection of the property. What areas do you inspect?

Answer 12

Only accessible areas.

Question 13

When dealing with 3rd parties in regards to fiduciary responsibility…

Answer 13

You are not held to the same degree but you have duties of fairness, honesty and disclosure.

Question 14

The word agent

Answer 14

Synonymous for broker. Only one agent per company- the real estate broker.

Question 15

Buyers agent is the selling agent

Answer 15

They are selling you a house

Question 16

Disclosure process (DEC)

Answer 16

Disclose- in writing educate on 3 types of agents and how they operate, signature received.
Elect- decide which type of agency will be used
Confirm- sign confirmation statement of what was agreed upon in step 2

Question 17

When should an agent disclose agency?

Answer 17

As soon as possible

Question 18

Real estate transfer disclosure is for who?

Answer 18

For 4 units or less. Seller fills this out.

Question 19

The disclosure statement must identify

Answer 19

1. Items in the home and whether they are operational.
2. Significant defects of the home if any
3. All info regarding improvements and alterations, concerns with neighbors and the neighborhood, HOA, and other possible problem areas.

Question 20

Right of termination

Answer 20

Failure to provide a transfer disclosure statement will not invalidate a closed transaction but failure to comply could result in liability for damages.

Question 21

Easton vs strassburger

Answer 21

We must now disclose to 3rd parties. It requires that all real estate agents conduct a competent and diligent visual inspection of all accessible property areas in a real estate sale involving 1-4 unit residential properties and disclose to the prospective buyer all material facts affecting the value of desirability of the property.

Question 22

A red flag is

Answer 22

A visual sign or indication of a defect

Question 23

Many agents today protect buyer in the area of inspection disclosure

Answer 23

1. Have the buyer pay for a home inspection and a termite report 2. Obtain a home warranty

Question 24

Death disclosure

Answer 24

Must disclose if it occurred within 3 years and disclose manner of death.

Question 25

Exception to death disclosure

Answer 25

HIV/AIDS- you disclose death but not the manner z

Question 26

Earthquake disclosure

Answer 26

Seller must disclose if property is or is not in an official earthquake fault area.

Question 27

Must disclose if the dwelling has earthquake weakness

Question 28

Lead based paint

Answer 28

The seller of home built before 1978 must deliver to buyers the booklet protect your family from lead in your home.

Question 29

Environmental hazards booklet

Answer 29

Includes asbestos lead and radon etc.

Question 30

Subdivision disclosure

Answer 30

The purpose of the California subdivided lands law is to protect purchasers in new subdivisions from fraud.

Question 31

Disclosure known as public report

Answer 31

Must be provided to purchasers who must sign and accept the report before purchase is complete.

Question 32

Real estate commissioner may issue a preliminary public report that is good for one year. A conditional public report that allows the subdivider to enter in to contract can be issued but escrow can’t close until issuance of the public report.