Maryland Home Improvement PSI Practice Exam

If a licensee lists a property in a known flood plain, what is their obligation if the seller denies flooding?

1. Rely on the face value of the seller's statement.

2. Inform the seller of potential legal consequences if the claim is untrue.

3. Inform the seller of the legal obligation to disclose flood facts.

4. Refuse to list the property and explain flooding issues.

The correct answer is: Inform the seller of the legal obligation to disclose flood facts.

The correct choice is to inform the seller of the legal obligation to disclose flood facts. In scenarios where a property is listed within a known floodplain, licensees have a responsibility to ensure that sellers are aware of their obligations regarding disclosure. Real estate laws require sellers to disclose any material facts that could affect the value or desirability of the property, including flooding history or issues. This obligation serves to protect both the buyer and the integrity of the real estate transaction. By informing the seller about their legal duty to disclose flood facts, the licensee is acting ethically and in accordance with the law, thereby minimizing potential liabilities and ensuring transparency in the real estate process. Failure to disclose this information could lead to significant legal ramifications for the seller and potentially for the licensee as well. The other options would not sufficiently address the responsibilities involved in such a situation. Relying on the seller's statement alone does not uphold the duty to investigate the veracity of claims regarding material defects. Informing the seller of potential legal consequences is less proactive than ensuring they understand their disclosure requirements. Refusing to list the property would not be practical or necessary unless the concerns were excessive or insurmountable.