How should a licensee respond when a seller refuses to disclose a known defect?

How should a licensee respond when a seller refuses to disclose a known defect?

• A. Accept the seller's decision and proceed with contract.
• B. Tell the buyer to find another property.
• C. File a complaint with MLS.
• D. Encourage disclosure, explain legal/ethical duties, and if the seller refuses, consider withdrawing or renegotiating; document communication.

Answer: (D)

This situation tests the licensee’s obligation to handle known defects with honesty and diligence. When a seller refuses to disclose a known defect, the licensee should actively address the issue by encouraging disclosure and clearly explaining the licensee’s legal and ethical duties to the parties involved. The seller’s obligation isn’t optional; withholding known defects can amount to misrepresentation and can expose both the seller and the licensee to liability. If the seller refuses to disclose, the prudent course is to discuss options with the parties—often including withdrawing from the deal or renegotiating terms (such as price or conditions) to reflect the defect. Throughout this process, the licensee should document all communications and attempts to obtain disclosure. This documentation protects all parties, demonstrates professional conduct, and helps ensure that the buyer makes an informed decision.

This situation tests the licensee’s obligation to handle known defects with honesty and diligence. When a seller refuses to disclose a known defect, the licensee should actively address the issue by encouraging disclosure and clearly explaining the licensee’s legal and ethical duties to the parties involved. The seller’s obligation isn’t optional; withholding known defects can amount to misrepresentation and can expose both the seller and the licensee to liability.

If the seller refuses to disclose, the prudent course is to discuss options with the parties—often including withdrawing from the deal or renegotiating terms (such as price or conditions) to reflect the defect. Throughout this process, the licensee should document all communications and attempts to obtain disclosure. This documentation protects all parties, demonstrates professional conduct, and helps ensure that the buyer makes an informed decision.