Idaho Real Estate Practice Exam

What happens if a material fact is not disclosed during a real estate transaction?

1. It leads to broker liability

2. It has no impact on the transaction

3. It increases the transaction price

4. It guarantees a legal dispute

The correct answer is: It leads to broker liability

When a material fact is not disclosed during a real estate transaction, it can lead to broker liability. Material facts are significant pieces of information that can influence a buyer's decision to purchase a property or the terms of that purchase. Real estate professionals, including brokers, have a legal and ethical obligation to disclose these important facts to protect consumers and ensure a fair transaction. If a broker fails to disclose a material fact, they can be held liable for any resulting damages or losses experienced by the buyer. In cases where non-disclosure occurs, the consequences can vary, including potential legal action from the aggrieved party. This liability stems from the trust and responsibility placed in real estate professionals to act ethically and transparently. The other choices do not accurately reflect the implications of failing to disclose material facts. For instance, claiming it has no impact on the transaction overlooks the legal responsibilities and potential consequences involved, while stating that it guarantees a legal dispute does not establish the nuances of liability as it can vary based on circumstances. Similarly, stating it increases the transaction price does not accurately capture the implications of non-disclosure, which centers primarily on legality and ethical obligations.