Book : California Real Estate Practice [Third Edition] By Robert L. Herd and Bruce A. Southstone

Chapter 4 : Disclosures

Class Discussion Topics

1.  A home you listed is right around the corner from a fire station. You have shown the home to a couple who wishes to make an offer. Do you have a duty to disclose the existence of the fire station?

2.  You represent a buyer in the purchase of a four-unit building in which she plans to live. The listing licensee has verbalized to you that one tenant is behind on his rent and that he is very belligerent. What, if anything, do you need to tell your buyer about this situation?

3.  You are holding an Open House on a home in which the former occupant died of AIDS. A buyer, who appears very interested in the home, asks you if anyone has died of AIDS in the property. What should you do?

4.  You sold a home to a family with two small children. During the escrow, the wife calls you and asks if any sex offenders live nearby.
What action should you take?

5.  You are the listing licensee of a condominium unit and an elderly lady with three cats wants to make an offer to purchase it through
you. You know that the CC&R allow a maximum of two domestic animals, but you proceed with the offer anyway. Are you acting in a proper manner? What disclosure duties do you have and to whom do you owe them?

6.  You have just received the Real Estate TDS from the listing agent. It states that an electrical transformer on the power pole in the yard burst and the liquid inside sprayed over the yard. It was properly cleaned up by the utility company. Your buyers ask you what you think. How should you respond?

7.  Complete a Real Estate TDS as if you were the seller of the property in which you currently live.

8.  The seller has stated in the Real Estate TDS that she replaced the roof “only about three years ago.” You feel the roof is much older
than that. What action should you take?

Chapter 4 Quiz

1.  Which of the following is true regarding a licensee’s duty in a real estate transaction?
a.   A listing licensee owes a duty of fairness only to the broker’s client, not the buyer.
b.    A listing broker is a fiduciary to both buyer and seller.
c.   All facts must be disclosed to a licensee’s client.
d.    A broker has a fiduciary duty to her client.

2.  Which of the following is true regarding agency disclosure?
a.   A licensee need not provide the seller of a rental property with an agency disclosure.
b.    The agency disclosure must be signed by the buyer at least ten days prior to close of escrow.
c.   The type of agency relationship elected by the parties is confirmed in the agency disclosure form.
d.    The listing agent must provide the agency disclosure prior to entering into the listing agreement.

3.  Which of the following is true regarding agency disclosure?
a.   The listing licensee must confirm the agency prior to completing the listing agreement.
b.    The three steps to the agency disclosure process are disclose, disclose, disclose.
c.   The agency disclosure statement allows brokers to offer subagency.
d.    The confirmation of agency must be in writing.

4.  The legislation resulting from Easton v. Strassburger limits the licensee’s duty of inspection and disclosure to which of the following?
a. A visual inspection only.
b. Inaccessible areas only.
c.   Residential one to four properties only.
d. Potential landslide areas only.

5.  Which of the following sellers must provide a Real Estate TDS?
a.   The seller of an owner-occupied triplex.
b. The seller of a small office building.
c. The seller of a residential lot.
d. Transfers made to a spouse.

6.  An Alquist-Priolo Special Study Zone refers to which of the following?
a. An inner-city redevelopment area.
b. An area of land that is steeply sloped.
c.   Active earthquake faults prone to surface ruptures.
d. Any area of undeveloped land.

7.  Which of the following is the purpose of bracing a water heater?
a. To make it last longer.
b.    To stabilize it in the event of an earthquake.
c. To allow for better water flow.
d.   To install it in a location where a pressure-release valve can be installed.

8.  Under the Truth-in-Lending Act, when a homeowner obtains a home equity loan on her home, the rescission period is
a.   noon the following business day.
b.    within five days after close of the purchase escrow.
c.   not available on an equity loan.
d.    midnight of the third business day following completion of the loan.

9.  A “Watch Out for Lead-Based Paint” notice must be given to the buyer of any one to four residential unit built prior to which one of the following years?
a. 1960
b. 1930
c. 1978
d. 1988

10.  The California Real Estate Law Disclosure Chart was created by which of the following organizations?
a.   California Association of Real Estate Boards
b.    California Mortgage Lenders Association
c.   California State Bar Association
d.    California Association of REALTORS®