Question

Which of the following is not a reason why agency relationship disclosure is required in a real estate transaction? 

Selections

• A. Required by statute

• B. Ethics and professional responsibility

• C. Imputed notice

• D. Clarify responsibility

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Answer: C

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5 Keys Summary

• The item that is not a reason why agency disclosure is required is Imputed notice.

• Imputed notice (or imputed knowledge) is a legal consequence of the agency relationship, where information known by the agent is presumed known by the principal, not a reason for the disclosure requirement itself.

• Agency disclosure is Required by statute (law) in California, where disclosure forms must be signed by the buyer and seller before entering a residential purchase agreement.

• Disclosure satisfies Ethics and professional responsibility by helping agents avoid conflicts of interest, adhering to fiduciary duties (like loyalty and honesty), and preventing violations that could lead to penalties.

• Disclosure serves to Clarify responsibility by explaining the duties owed by different agents (seller’s, buyer’s, dual) to all parties, thereby preventing misunderstandings and disputes.

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