hard · National Real Estate Exam transfer-title
A buyer's agent is aware that the property being purchased has a 'cloud on title,' but the agent believes the issue is minor and will be resolved at closing. The agent does not tell the buyer.
If the title is later found to be unmarketable, what is the buyer's legal position?
- The knowledge is only imputed to the buyer if the agent was a 'general agent' rather than a limited 'special agent' in this transaction.
- The buyer is entitled to a full refund of the purchase price because title defects are always 'strict liability' matters for the seller.
- The buyer is considered to have accepted the property with knowledge of the title defect because the agent's knowledge is imputed to the buyer.
- The agent's honest personal belief that the title issue was only 'minor' still fully protects the buyer from imputation of the agent's knowledge of the defect.
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