hard · National Real Estate Exam
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 because the contamination is below regulatory action levels and the buyer did not inquire, 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 withhold disclosure because the duty to disclose latent defects runs only to the agent's own principal, not to the third-party buyer.
- The agent must disclose only if the buyer's inspection contingency expressly covers environmental hazards; otherwise caveat emptor controls.
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