Difficulty: Medium

Average Score: 67%

When showing a property to a buyer, a licensee must disclose which of the following known facts?

Rationale

Deteriorating septic field must be disclosed to a buyer.

A licensee is legally obligated to disclose any known material defects in a property, including serious issues like a deteriorating septic field, which can significantly impact the property's value and safety for potential buyers.

A (length of time the seller occupied the property) YOUR ANSWER

While the length of time a seller has occupied a property may provide some context on its history, it is not considered a material defect or a critical fact that affects the property's value or safety. Therefore, it does not need to be disclosed to buyers.

B (presence of a group home) YOUR ANSWER

The presence of a group home may be relevant to community dynamics or property value perceptions; however, it is not classified as a material defect. Disclosure requirements typically focus on structural issues or safety hazards rather than the existence of specific types of residents.

C (possible tax increase due to new sale price) YOUR ANSWER

While buyers should be aware of potential tax implications from a sale, the possibility of a tax increase is speculative and not a known fact that can be disclosed with certainty. Licensees are generally required to disclose tangible issues rather than future uncertainties.

D (deteriorating septic field) CORRECT

A deteriorating septic field is a significant issue that poses health and safety risks, as well as potential financial liabilities for the buyer. This known defect must be disclosed as it directly affects the property's usability and value.

Conclusion

In real estate transactions, licensees are required to disclose known material defects that can affect a buyer's decision. Among the choices presented, the deteriorating septic field stands out as a critical issue that must be communicated to prospective buyers, while the other options involve non-defective information or speculative concerns that do not necessitate disclosure. This obligation ensures transparency and protects the interests of both parties in the transaction.

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