section 14 unit 1:

Seller need not disclose a leaky roof unless the buyer specifically asks whether the roof has leaked.

Caveat emptor

Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step? a. arbitration b. A second round of mediation c. condemnation d. litigation

a. arbitration

Seller makes no representations about the property's condition.

caveat tempor

Seller must proactively disclose any known defects.

full disclosure

As Sarah, Danny, and Maureen inspect the property, the trio notices several items. First, they're all happy it's another sunny, calm, mild day (the fourth one in a row), which is a real plus if you're climbing up on roofs and walking outside around the property. Second, the house isn't perfect. Which four of these are items Sarah would likely include in her inspection report? a. Damaged shingles b. tear in the carpet c. Standing water in the basement d. leaky kitchen faucet e. Spider in the crawl space f. crack in the foundation

a. Damaged shingles c. Standing water in the basement d. leaky kitchen faucet f. crack in the foundation

In full seller disclosure states, whose responsibility is it to review disclosures, ask questions, and obtain a home inspection? a. buyer b. Licensee representing the buyer c. Licensee representing the seller d. seller

a. buyer

In caveat emptor states, which party carries the burden related to a property's condition? a. buyer b. seller

a. buyer In caveat emptor states, it's not the seller's responsibility to proactively disclose any known defects a property may contain. The burden lies with the buyer, who must perform the due diligence to learn about the property's condition.

Danny and Maureen discuss options for handling the items noted on the report. a. happens b. doesn't happen

a. happens

Danny and Maureen review the inspection report. a. happens b. doesn't happen

a. happens

Drainage issues a. inspection b. not an inspection

a. inspection

Evidence of pests a. inspection b. not an inspection

a. inspection

roof condition a. inspection b. not an inspection

a. inspection

Bottom line, the seller must be honest. What if the seller did, in fact, know the roof was damaged, but she stated it wasn't? Which of these options can a buyer take upon discovering the seller was purposely untruthful in her disclosures? Ask the seller to make necessary repairs and/or provide a credit to the buyer. a. option b. not an option

a. option

Bottom line, the seller must be honest. What if the seller did, in fact, know the roof was damaged, but she stated it wasn't? Which of these options can a buyer take upon discovering the seller was purposely untruthful in her disclosures? If the transaction has already closed, sue the seller for breach of contract or fraud. a. option b. not an option

a. option

Bottom line, the seller must be honest. What if the seller did, in fact, know the roof was damaged, but she stated it wasn't? Which of these options can a buyer take upon discovering the seller was purposely untruthful in her disclosures? Terminate the agreement and ask for a refund of earnest money. a. option b. not an option

a. option

Buyer's licensees should counsel buyers that seller disclosures are insufficient for due diligence. a. responsibility b. not a responsibility

a. responsibility

Buyer's licensees should follow up on red flags and recommend that buyers obtain a home inspection. a. responsibility b. not a responsibility

a. responsibility

Buyers should obtain a home inspection. a. responsibility b. not a responsibility

a. responsibility

Honestly answer prospective buyers' questions about the property's condition. a. responsibility b. not a responsibility

a. responsibility

If you are required to disclose inspection findings, then they must be disclosed to all parties in the transaction. a. true b. false

a. true

Let's assume a buyer in a full disclosure state received the disclosure form from the seller, who reported she wasn't aware of any material defects with the property. However, an inspection uncovered some hail damage to the roof. The seller was unaware of this defect. What's true or false about this situation? Even though the property's already under contract, the buyer can ask the seller to make necessary repairs and/or provide the buyer with a credit to cover the cost of repairing the roof. a. true b. false

a. true

Buyer's agents must request permission from the buyers to provide copies of inspection reports. a. true b. false

a. true The buyers paid for the inspection, and the inspection report is thus the property of the buyers. Their agent can't provide copies of the report without first obtaining permission.

means the information is known to the licensee regarding the physical condition of a property or could be plainly noticed by the licensee, regardless of whether it is disclosed by the owner/seller.

actual knowledge

means the information is negative information about the property and is usually something that would reduce the property's value.

adverse

If a resolution is not found, _________________ may be the next step.

arbitration

Sarah and Danny discussed the purpose of the home inspection in your resource. What is the purpose? a. To assist the seller with completing any required property disclosures b. To provide the buyer with a true picture of a property's condition c. To support the home inspection industry

b. To provide the buyer with a true picture of a property's condition

Your buyer clients Josie and Terry made an offer that was accepted on a cute bungalow in a city neighborhood. They just received the inspection report and were delighted to see only minor condition issues. They'd like the sellers to replace two windows that have broken seals. In response, the sellers asked for a copy of the inspection report. What must you do? a. You can copy the pages related to the windows and provide those. b. You can only provide a copy if you get permission from Terry and Josie. c. You must request permission from the inspector, who holds the copyright. d. You're required to provide a copy of the report to the sellers.

b. You can only provide a copy if you get permission from Terry and Josie. Inspection reports are the property of the buyers who paid for the inspection. Copies may only be provided to sellers or listing agents if they buyers give you permission to do so.

What four things might be covered by the home warranty that the builder provides for James? a. unappealing paint color b. broken gate or fence c. leaky faucet d. Crack in foundation e. Improperly hung door

b. broken gate or fence c. leaky faucet d. Crack in foundation e. Improperly hung door

The seller is required to repair all items noted on the report. a. happens b. doesn't happen

b. doesn't happen

Let's assume a buyer in a full disclosure state received the disclosure form from the seller, who reported she wasn't aware of any material defects with the property. However, an inspection uncovered some hail damage to the roof. The seller was unaware of this defect. What's true or false about this situation? The buyer can sue the seller for breach of contract. a. true b. false

b. false

Let's assume a buyer in a full disclosure state received the disclosure form from the seller, who reported she wasn't aware of any material defects with the property. However, an inspection uncovered some hail damage to the roof. The seller was unaware of this defect. What's true or false about this situation? The seller is guilty of fraud. a. true b. false

b. false

Licensees must always disclose all inspection findings. a. true b. false

b. false Adverse material facts in the inspection report must be disclosed in many states. But other findings may not be subject to disclosure, and some states may not require the disclosure of inspection findings.

Conceal defects from buyers. a. responsibility b. not a responsibility

b. not a responsibility

Hire a home inspector to learn about any property defects. a. responsibility b. not a responsibility

b. not a responsibility However, buyers are strongly encouraged to have an inspection performed to learn about any defects.

Proactively disclose all known defects to buyers. a. responsibility b. not a responsibility

b. not a responsibility This is not a seller's responsibility in caveat emptor states. However, many states do require sellers to proactively disclose known defects.

Paint drops on carpeting a. inspection b. not an inspection

b. not an inspection

Roy purchased a newly constructed home with a warranty that covers major structural defects for 10 years, and systems (HVAC, electrical, plumbing) for three years. After living in the home a few months, Roy notices the following defects and submits them all. Which one will likely be covered by the warranty? a. A baseboard with paint drips b. A light fixture that doesn't match other light fixtures in the home c. A split ceiling joist in the basement d. a tear in the carpet

c. A split ceiling joist in the basement

If there are any concerns about a seller's honesty, or if a buyer wishes to have a more objective perspective on various physical condition issues, the buyer may want to ask the seller to obtain a CLUE report for the buyer's review before making an offer. What's the purpose of a CLUE report? a. Estimate the property's value comparable to other recently sold properties in the area b. Outline ways in which the property may not measure up to current building codes c. Summarize all insurance claims filed relative to the property within the last seven years d. Describe all repairs made on the property by the current owner

c. Summarize all insurance claims filed relative to the property within the last seven years

Insurance claims might not appear on a CLUE report for a property if the claims were made more than ______ years ago. a. 10 b. 4 c. 9 d. 7

d. 7

Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tell Ed that they thought inspections were only for older homes. How should Ed respond to that? a. Ed needs to inform his clients that home inspections are most important for newer properties. b. Ed should tell him that he doesn't trust the builder. c. He should let them know that lenders for new construction loans require inspections. d. He should remind them that every dwelling, no matter the age or size, should have a home inspection.

d. He should remind them that every dwelling, no matter the age or size, should have a home inspection.

When a buyer finances a newly built home with a Federal Housing Administration loan, FHA requires the builder to ______. a. Create a fund equaling 20% of the home's cost set aside to cover construction defects for the next 10 years b. Provide a builder-backed home warranty c. Provide the buyer with a 30% discount on materials and labor for home repairs d. Purchase a third-party home warranty to protect the buyer

d. Purchase a third-party home warranty to protect the buyer

James is buying his first home. In fact, it's the first time anyone is buying this house. It's a newly constructed, single-family home. Although confident in an inspector's ability to find any material defects with the property, James is still a little uneasy about the property. It seems like nowadays developers just build, build, build. Quality isn't what it used to be. His uneasiness begins to fade when his agent tells him that the builder provides a home warranty. What's the purpose of the warranty? a. To allow the buyer to change cosmetic features of a home b. To provide a guarantee to the buyer that the developer will buy back the property at fair market value if the buyer isn't happy with the purchase c. To allow the buyer the option to customize features of the home d. To protect the buyer in the event that certain defects or adverse actions occur

d. To protect the buyer in the event that certain defects or adverse actions occur

In states where full disclosure isn't required, whose responsibility is it to disclose any items required by law and respond honestly to any questions about the property's condition? a. appraiser b. buyer c. lender d. seller

d. seller

Sellers must disclose the condition of all items on a seller disclosure form, plus any known material defects not listed on the form.

full seller disclosure

Often, ___________ is not an option—it's a last resort when arbitration decision isn't binding.

litigation

means the information is considered important in deciding what course of action a buyer takes regarding the real estate transaction.

material

James has been in his house for two months. A severe thunderstorm rolled through the area, and James noticed a leak around one of his windows. The first thing he should do is file a claim according to the warranty. The builder says the window is defective and that James needs to contact the window's manufacturer. The manufacturer says the window isn't defective and refuses to fix the problem. To address this disputed claim, James must first engage in ___________________ to attempt a resolution.

mediation

means any problematic property condition that may not necessarily be immediately apparent.

physical

Licensee Kenneth noticed that his new listing (in a full seller disclosure state) has a leaky roof. It was quite evident from the stains on the ceiling. Does Kenneth have to disclose this? Let's MAAP it out and see. is it material? is it adverse? Is it actual knowledge Kenneth has of the property? Does it affect the physical condition of the property? Should Ken disclose it?

yes to all

You represent a seller as a listing agent. Your seller informs you that the wiring in the house isn't up to code, but there haven't been any problems with the wiring to date. The property is in a full seller disclosure state, but the buyer doesn't ask about the wiring. Are you required to disclose the information about the wiring? Is the outdated wiring material? is it adverse? Do you have actual knowledge of the outdated wiring? Does the outdated wiring affect the physical condition of the property? Should you disclose the outdated wiring?

yes to all Having to replace wiring that's not up to code in a house involves a lot of physical components: the wiring itself, the walls that would have to be ripped open to check for the wiring, ceilings, or breaker boxes. The list could go on. These things affect the physical condition of the property, even if they aren't visible all the time.