Texas Real Estate Agency - UNIT 3 - Duties and Disclosures to Third Parties

For the following statement, indicate whether it is true or false and why: An agent owes a duty to disclose all material facts to their client.

True, all material facts must be disclosed to a client.

Which of the following can be purchased for additional coverage in a Texas title policy?

Unrecorded liens not known of by policyholder

A listing broker must explain to the seller that the seller's full disclosure responsibility includes

material facts that may be of importance to the buyer's decision.

Title insurance provides the policyholder with

protection against defects in the title, up to policy limits.

While doing a listing brief with a potential seller, the sales associate is told that there was a major fire on the property that caused substantial damage two years ago. Because all renovations and repairs resulting from the fire were covered by the homeowner's insurance policy, the owner insists that potential purchasers should not be given information about the fire. The sales associate

should decline the listing.

Standard title insurance coverage would NOT protect the buyer from

the government right of eminent domain.

Which type of death on the property would a seller have to disclose?

A friend visiting the owner slips and falls on the pool tile

Should a license holder disclose information about sex offenders in the neighborhood of a listed residential property?

A license holder has no duty to disclose such information.

Which fact is material and therefore must be disclosed to a potential purchaser?

All of these facts are material and must be disclosed.

Which of the following is a TRUE statement regarding disclosure of information related to sex offenders to prospective buyers?

Texas law relieves real estate agents from a duty to disclose such information.

Which of the following is typically covered as part of standard coverage in a Texas title policy?

Defects found in public records

Which of the following is the MOST common complaint against listing brokers?

Failing to disclose material defects or property condition

A listing broker tells potential buyer A the details of potential buyer B's offer, but tells potential buyer B nothing about potential buyer A. This is an example of a violation of which duty to third parties?

Fairness

Indicate whether the following state is true or false and why: A broker owes the same duties to a third party buyer as they owe to a client seller under a listing agreement.

False. A broker has fiduciary duties to a client and duties of honesty and fairness to a third party buyer.

An abstract of title for a subject property contains a condensed version of

instruments filed into the property records.

What are three duties a listing broker has to a customer buyer?

Honesty, fairness, and good faith

Standard title insurance coverage in Texas does NOT include

issues related to bankruptcy.

George is a sales agent who represents Janet under a listing agreement to sell her new construction, never-inhabited four-plex that she has owned for 11 months. Is Janet required to provide the Seller's Disclosure Notice (SDN) to potential purchasers? Why or why not?

Janet is not required to provide the SDN because the four-plex has four dwelling units.

What are license holders in Texas responsible for telling buyers regarding quality of title?

License holders must advise buyers to obtain either an attorney's opinion of title, based on an abstract, or a policy of title insurance.

Must a license holder treat a customer the same as he treats his client?

No, a license holder has a duty of confidentiality to his client that he does not owe to a customer.

Sergei is a broker who represents a seller under a listing agreement. He has heard rumors that the house was used in a high-profile series of crimes in the area involving drug sales, prostitution, and gambling more than 20 years ago. The house has been bought and sold several times through the years, and the current owner has no idea whether the rumor is true although he has asked Sergei not disclose any alleged criminal activity, even if Sergei finds out its true. Which of following statements BEST describes whether Sergei is required to disclose the criminal activity to potential buyers?

No, because Sergei has only heard rumors about the illegal activity and doesn't know whether the rumors are true.

The seller has never lived in the residential property she is selling and is confused about what she is required to disclose in the Seller's Disclosure Notice. She asks her listing agent to fill out the form on her behalf. Is the listing agent required to fill out the notice on behalf of her client?

No, the notice should be filled out by the seller because the listing agent likely does not know the specifics about the property.

A seller and a buyer enter into a contract for the buyer to purchase the seller's property. The seller is a trustee in a bankruptcy. Is the seller required to give buyer the Seller's Disclosure Notice (SDN)?

No, the requirement to provide the SDN does not apply to a bankruptcy sale.

Which of the following nearby activities would a license holder be required to disclose because it might impact the client's decision to make, accept, or reject offers?

Noisy, obnoxious neighbors

Which of the following sellers disclosure notice forms is a seller generally required to provide to a buyer in a real estate transaction?

None of these. (Correct answer is The Texas Property Code - SDN)

While acting as a subagent, Harry shows a property to a customer and becomes aware that the current owner suffers from AIDS. Two weeks later, Harry is now acting as an agent of a prospective buyer who also happens to be Harry's cousin. Harry may

Not reveal the information

Which of the following is true regarding stigmatized property?

Stigmatized property refers to a real or imagined condition or event that decreases its marketability or value.

Which of the following is TRUE regarding surveys?

Surveys are required when showing the location of new improvements.

What does Texas law require of enforcement officials regarding publication of sex offender information?

That they publish information regarding the offender in a local newspapers

What is the duty of a license holder regarding the disclosure of the fact that an occupant of the property died of AIDS?

The Canons of Professional Ethics and Conduct prohibit its disclosure.

A seller provided the Seller's Disclosure Notice to the buyer before both parties sign the contract. Once the contract is in effect, what right does the buyer have to terminate the contract under Section 5.008 of the Texas Property Code?

The buyer may not terminate the contract under Section 5.008 of the Property Code.

Which of the following would probably NOT be considered a material fact that would need to be disclosed by a real estate agent?

The window in the bedroom was replaced five years ago.

The Seller's Disclosure Notice, which has been developed by TREC,

does not relieve the seller or the listing agent of their responsibility to disclose property issues not covered by the form.

Megan's Law

does not require agents to make a disclosure of sex offenders reportedly living near their listed properties.

The buyer pays cash for a vacant lot, relying on the seller's old survey, which showed the lot measured 180 feet by 260 feet. After commencing construction of his new home, he discovers that the lot measures only 165 feet across the front and that the neighbor behind him has a fence that encroaches nearly three feet across the back of the buyer's lot. These boundary shortages are

excepted from the standard title policy.