chapter 8 disclosure Flashcards
Which of the following regarding the Property Disclosure Statement (PDS) is TRUE?
- Once the PDS is filled out, the licensee is no longer liable for misrepresentations regarding the physical aspects of the property.
- The PDS will not form part of the contract of purchase and sale unless so agreed by the parties.
- A residential seller who does not fill out a PDS can still list with the multiple listing service, even if the board has adopted the use of the PDS.
- It is acceptable for a licensee to accept everything which a vendor includes on the PDS at face value.
Correct Answer: 2
The PDS is intended to shift some of the risk for a misrepresentation to the vendor. However, licencees are still under an obligation to independently verify the information included. Where a board has adopted the use of a PDS, it must be included in a residential listing or the listing will be rejected from the MLS7. The PDS will not form part of the contract of purchase and sale unless this is specifically agreed to by the parties.
Sandra Seller listed her property with Anson Agent. The property remained on the market for a year but there has not been any interest. In an attempt to attract more interest, Sandra lowers the asking price by 10%. Anson decides to buy the property, but uses his sister’s name as the buyer and makes an agreement with his sister that she will transfer the property to him after the transaction is complete. He makes no disclosure of his connection with the transaction to Sandra. Which of the following statements is TRUE?
- Sandra can have the transaction set aside, no matter how fair it may appear to have been.
- Because the transaction has already been completed, Sandra has no recourse.
- Sandra can only recover 25% of the commission paid by her.
- Because his sister is listed as the buyer, Anson has no duty of disclosure to Sandra.
Correct Answer: 1
Option (1) is correct because Anson has broken section 53 of the Real Estate Services Rules for Disclosure of Interest in Trade. Where a real estate licensee is guilty of nondisclosure and they have purchased their client’s property, the seller can have the whole transaction set aside, regardless of whether or not the transaction appears to be fair. For this reason, Option (2) is incorrect. Option (3) is incorrect because where a licensee is guilty of nondisclosure, they will lose the commission and/or be liable to the principal in damages in a court action. Option (4) is incorrect because the rules relating to the Disclosure of Interest in Trade also apply when a licensee acquires land indirectly, as is the case in this question.
Yana is a listing licensee who is assisting her client, Gabriel, in the sale of his property in Vancouver. Yana hosts an open house, with a number of potential buyers attending. Which of the following is TRUE with respect to Yana’s disclosure obligations to buyers at her open house?
- Yana must provide every buyer who attends her open house with a Disclosure of Representation in Trading Services form.
- Yana must provide every buyer who attends her open house with a Disclosure of Risks to Unrepresented Parties form.
- Yana can provide trading services to both Gabriel and a buyer through a dual agency relationship, as long as both parties are provided with a Disclosure of Risks Associated with Dual Agency form.
- If a potential buyer starts to get into a conversation with Yana about their personal information, needs, etc., Yana may have to provide that buyer with both a Disclosure of Representation in Trading Services form and a Disclosure of Risks to Unrepresented Parties form.
Correct Answer: 4
Option (4) is correct because under section 5-10 of the Real Estate Rules (the “Rules”), if a licensee is hosting an open house and receives information from a buyer about their motivation, financial qualifications, or needs in respect of real estate, the licensee will have to provide that buyer with a Disclosure of Representation in Trading Services form. Because Yana is acting on behalf of her client Gabriel in this trade, if the buyer is unrepresented, she will also have to provide a Disclosure of Risks to Unrepresented Parties form under section 5-10.1 of the Rules.
Option (1) is incorrect because section 5-10(3) provides some exceptions to the requirement to provide a Disclosure of Representation in Trading Services form. As long as Yana does not solicit or receive information from buyers about their motivation, financial qualifications, or needs in respect of real estate, she does not have to provide the form when only hosting an advertised open house. Option (2) is incorrect because the Disclosure of Risks to Unrepresented Parties form is only required where the requirement to provide a Disclosure of Representation in Trading Services form is met (i.e., the licensee is providing trading services to the unrepresented party and does not fall within the aforementioned exception) AND the licensee is also representing a client in the same trade in real estate. Option (3) is incorrect because sections 5-16 and 5-17 of the Rules prohibits the practice of dual agency, except in a very narrow exception where the real estate is in a remote location that is under-served by licensees and it is impractical for the parties to be provided trading services by different licensees. As this property is located in Vancouver, the situation does not fall within the exception for providing dual agency.
Corkie is a new licensee who has just signed her first listing agreement. Anxious to refresh her memory of her duties as an agent, she tries to recall her prelicensing studies. Which one of the following is NOT one of the duties of an agent which Corkie learned of in her course?
- The duty to make full disclosure of all material facts
- The duty not to act for more than one principal without disclosure and consent
- The duty to indemnify the principal
- The duty to follow lawful instructions from the principal
Correct Answer: 3
The duty of indemnity (protection from loss) is one which the principal owes to the agent and not vice versa.
