Leasing License Practice Exam

What does the Real Estate License Act require licensees to disclose?

1. All financial transactions

2. Material facts concerning the transaction

3. Personal opinions of the neighborhood

4. All past owners of the property

The correct answer is: Material facts concerning the transaction

The Real Estate License Act emphasizes the importance of disclosure in the real estate transaction process, primarily focusing on material facts concerning the transaction. Material facts are defined as any information that could influence a buyer's decision to purchase a property or a seller's decision to sell. These include issues such as property defects, zoning changes, or any legal matters that could affect the property’s value or the buyer’s rights. It's essential for licensees to communicate these material facts transparently to uphold ethical standards and foster trust in the industry. By ensuring that all parties have access to this critical information, licensees contribute to informed decision-making, protect consumers, and minimize legal liabilities that may arise from non-disclosure of relevant issues. While financial transactions and personal opinions might be relevant in some contexts, they do not fall under the specific requirements mandated by the Act for disclosure. Disclosing all past owners of a property, while potentially interesting, is also not critical to the transaction in the way that material facts are.