A seller's or agent's legal obligation to reveal known material facts affecting a property's value or desirability.
Why Duty to Disclose matters on the exam
This term belongs to Property Disclosures. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Duty to Disclose
Every Freehold question shows why the right answer is right — and cites its source.
A latent defect is best described as a defect that:
Is obvious to absolutely anyone who simply walks casually through the property one single time
Occurred only after the buyer took possession
Is hidden and not discoverable through a reasonably careful visual inspection
Results only from the normal wear and tear of ordinary daily use over the years
Show answer & explanation
Is hidden and not discoverable through a reasonably careful visual inspection — Latent defects are hidden conditions that an ordinary inspection would not reveal, which is why sellers who know of them have a heightened duty to disclose them to buyers.
Source: PSI National Real Estate Exam Content Outline §6 Property Disclosures
Primary responsibility for disclosing known material defects in a home rests with:
The buyer's mortgage lender
The county recorder of deeds
The home inspector hired after the offer is accepted
The seller
Show answer & explanation
The seller — The seller typically has firsthand knowledge of the property's condition and history, placing the primary legal duty to disclose known material facts on the seller.
Source: PSI National Real Estate Exam Content Outline §6 Property Disclosures
A seller lived through repeated basement flooding every spring for a decade but insists they never formally 'diagnosed' the cause, so they claim no duty to disclose. Which best reflects standard disclosure principles?
A licensed contractor's written report is generally what establishes knowledge
The seller's firsthand, repeated experience of the flooding is generally treated as actual knowledge of a defect, even without an expert diagnosis
The seller has no duty to disclose because no permit was ever pulled for the repairs eventually made to address the flooding
Ignorance of the technical, engineering cause of a defect is always a complete legal defense against a disclosure claim
Show answer & explanation
The seller's firsthand, repeated experience of the flooding is generally treated as actual knowledge of a defect, even without an expert diagnosis — Actual knowledge for disclosure purposes generally includes what an owner personally experienced and observed, such as recurring flooding, even if the seller cannot name the precise technical cause.
Source: PSI National Real Estate Exam Content Outline §6 Property Disclosures
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