Affiliate Broker Tennessee (TN PSI) National Practice Exam `

If a buyer discovers undisclosed issues with well water after closing, who is liable for this omission?

1. Only the seller

2. Only the agent

3. Both the agent and the seller

4. No one is liable

The correct answer is: Both the agent and the seller

In the context of real estate transactions, disclosure of property issues is a critical legal responsibility. When a buyer discovers undisclosed issues with well water after closing, both the seller and the agent can be held liable for the omission. The seller is typically responsible for providing accurate disclosures regarding any known issues with the property, including water quality and safety concerns. If the seller was aware of the problems with the well water but failed to disclose them during the sale, they can be held accountable for misrepresentation or failure to disclose material facts. The agent, on the other hand, has a duty to represent their client's interests and to also conduct due diligence to discover any issues that could affect the transaction. If it is determined that the agent had knowledge of the well water issues or should have reasonably discovered them and did not communicate this information to the buyer, they may also be liable. Agents are expected to adhere to certain standards and regulations, and failing to do so can result in legal consequences. Thus, both parties can share liability in this scenario because they both have responsibilities concerning the disclosure of material information. The relationship and obligations between the buyer, seller, and agent emphasize the importance of transparency and due diligence in real estate transactions.