Maryland Home Improvement PSI Practice Exam

If a buyer relies on a broker's incorrect statement about property taxes, what can the buyer claim to rescind the contract?

1. Puffing.

2. Misrepresentation.

3. Lack of care and diligence.

4. Nothing; property taxes are public record.

The correct answer is: Misrepresentation.

When a buyer relies on a broker's incorrect statement about property taxes, the buyer can claim misrepresentation to rescind the contract. Misrepresentation occurs when false information is provided, which the other party relies on when entering into an agreement. In this case, if the broker inaccurately stated the amount or nature of the property taxes and the buyer made decisions based on that information, the buyer has the right to argue that the contract should be rescinded due to the misrepresentation. Puffing refers to exaggerated statements that are generally understood to be subjective opinions rather than factual claims. Since the statement about property taxes is a factual representation, it does not fall under puffing. The concepts of lack of care and diligence pertain to the performance standards expected from professionals, but in this context, the buyer's claim directly relates to the provision of incorrect factual information. While property taxes are indeed public records, this does not eliminate the potential accountability of the broker for misrepresenting the information, especially if the buyer relied on the broker's statement instead of verifying it.