Humber/Ontario Real Estate Course 4 Exam Practice

In what scenario would a salesperson's fiduciary duty require action regarding latent defects?

1. Only if the seller permits disclosure

2. Regarding defects visible to the naked eye

3. Substantial evidence or materiality

4. Upon actual buyer request

5. When disclosed in the purchase agreement

6. Without materiality or substantial evidence

The correct answer is: Substantial evidence or materiality

A salesperson's fiduciary duty involves acting in the best interests of their client, which includes taking action regarding latent defects when there is substantial evidence or materiality. Latent defects are issues with a property that are not immediately observable and can significantly affect the value or desirability of the property. When there is substantial evidence indicating a latent defect, the salesperson has an obligation to disclose this information to their client, even if the defect isn't visible. Failing to act on substantial evidence of these defects could lead to issues of liability for the salesperson, as they could be considered to be withholding critical information that impacts the buyer's decision-making process. This scenario emphasizes the importance of transparency and due diligence in real estate transactions. The fiduciary duty compels the salesperson to manage and communicate such findings appropriately, ensuring that all parties involved in the transaction are aware of any material issues that could influence their decisions. Other scenarios, such as the seller's permission to disclose or specific requests from buyers, do not generalize the fiduciary duty and could lead to potential legal repercussions if critical information about latent defects is not disclosed despite substantial evidence.