Humber/Ontario Real Estate Course 3 Exam Practice

Salesperson Lewis is listing a property that has an access road encroaching on neighboring land. The seller instructs not to disclose this, and the salesperson agrees. What is the correct course of action?

1. Salesperson Lewis must follow this lawful instruction of his client, as he is obligated to protect and promote the client's interests

2. Salesperson Lewis is knowingly omitting important information that should be disclosed, violating the Code of Ethics

3. The issue has existed without any problem and is, therefore, not a material fact that needs to be disclosed

4. This information need not be disclosed, as caveat emptor applies and the buyer should investigate such matters

The correct answer is: Salesperson Lewis is knowingly omitting important information that should be disclosed, violating the Code of Ethics

The correct answer highlights the obligation of the salesperson to adhere to the principles of transparency and ethical conduct in real estate transactions. When Salesperson Lewis agrees not to disclose the encroachment of the access road on neighboring land, he consciously omits a critical piece of information that could significantly affect the buyer's decisions. In real estate, there’s a responsibility to disclose material facts that could influence a buyer's choice or the property's value. Not disclosing such information violates the Code of Ethics, which mandates honesty and fairness in all dealings. By accepting the seller's instruction to withhold this information, Lewis is participating in a breach of ethical standards, which may expose him and his brokerage to legal consequences. Considering the other options, while protecting the client is important, it cannot come at the expense of ethical obligations. The notion that the issue is not a material fact is misleading, as encroachments typically have legal implications that could affect ownership rights. Lastly, caveat emptor, or "let the buyer beware," does not absolve agents of their duty to disclose known issues that could materially impact the transaction.