medium · National Real Estate Exam disclosures
A seller's agent knows the home sits atop a previously remediated underground storage tank and that the prior owner's report disclosed minor residual contamination below regulatory action levels. The buyer never asks about environmental conditions, and the jurisdiction follows the common-law rule for stigmatized/latent conditions.
Which best states the agent's disclosure obligation here?
- The agent need not disclose the remediated underground tank because the residual contamination is below regulatory action levels and the buyer never inquired, making it legally immaterial.
- The agent must disclose the remediated tank and residual contamination because it is a known latent material defect, and being below action levels does not negate materiality to a reasonable buyer.
- The agent may lawfully withhold disclosure because the duty to disclose a known latent material defect runs only to the agent's own principal, and never extends to the opposing third-party buyer.
- The agent must disclose this only if the buyer's inspection contingency expressly covers subsurface environmental hazards or prior underground tank remediation; otherwise, caveat emptor controls the deal.
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