Arkansas Real Estate Broker Exam — All Questions
3 questions
A seller knows the basement floods every spring, but the problem is invisible during a normal dry-weather showing. What must the seller and listing agent do?
- a.Say nothing, because caveat emptor applies
- b.Disclose it only if the buyer specifically asks
- c.Disclose the known latent defect to the buyer✓
- d.Repair it secretly before closing
Seasonal flooding that cannot be seen on an ordinary inspection is a latent (hidden) material defect. A seller and agent who know of a latent material defect must disclose it, because the buyer has no way to discover it independently. Modern law limits the old caveat emptor rule, and staying silent or concealing the defect can be misrepresentation or fraud. A broker whose office conceals such a defect risks liability imputed to the entire firm.
The federal lead-based paint disclosure rule applies to most residential housing built:
- a.Before 1978✓
- b.Before 1950
- c.After 1978
- d.Only to commercial buildings
The federal lead-based paint rule applies to most residential housing built before 1978, the year lead-based paint was banned for residential use. Sellers and landlords must disclose known lead hazards, provide available records, deliver the EPA pamphlet, and give buyers a period to test. The rule is nationwide and does not depend on the buyer asking. A broker must ensure the office consistently uses the correct current lead-paint forms for pre-1978 homes.
An agent tells a buyer, 'This home has the best sunset view in the whole city.' The buyer later complains the statement was untrue. This kind of statement is:
- a.Actionable fraud
- b.An illegal misrepresentation
- c.A violation of fair housing law
- d.Puffing, which is a legal opinion✓
Calling a view 'the best in the city' is puffing: exaggerated opinion or sales talk that a reasonable buyer would not treat as a statement of verifiable fact. Puffing is legal. It becomes a problem only when an agent states a false material fact (for example, misstating the lot size or concealing a known defect), which can be misrepresentation or fraud. A broker should teach agents the line between harmless opinion and false factual claims to manage the firm's risk.