Humber/Ontario Real Estate Course 4 Exam Practice

What should a licensee do when a seller discloses that there is an existing lien on the property?

1. Advise the seller to inform any potential buyers of the existing lien.

2. Ignore the lien information if it's not from an official document.

3. Ensure the lien is cleared before listing the property.

4. Include details of the lien in the seller representation agreement.

5. Only disclose the lien if the buyer’s agent requests the information.

6. Validate the lien before proceeding with any further action.

The correct answer is: Advise the seller to inform any potential buyers of the existing lien.

When a seller discloses that there is an existing lien on the property, it is essential for the licensee to advise the seller to inform any potential buyers of the existing lien to ensure transparency and ethical practice in real estate transactions. Full disclosure regarding liens is crucial because it affects the title and marketability of the property. A lien indicates that there is a legal claim against the property, typically for unpaid debts, and potential buyers need to be aware of such encumbrances before making informed decisions. Not informing buyers could lead to legal issues for both the seller and the licensee, as the buyer may feel misled if they discover the lien after entering into a contract. Additionally, while it may be tempting to ignore lien information or only disclose it if specifically requested, doing so could violate legal and professional standards. Acknowledging and addressing such information upfront fosters trust and enables buyers to evaluate the risks associated with purchasing the property. Remaining proactive in discussing the lien allows the seller to explore options for resolving the lien and assists in mitigating future complications during the sale process. Therefore, encouraging the seller to disclose the lien is the most responsible course of action in this scenario.