Washington Managing Broker Exam — All 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 of a material fact about the property
• 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.

A licensee is deciding whether a particular fact about a listed property has to be disclosed to buyers. Which test best identifies a material fact?

• a.Any fact the seller personally finds embarrassing to reveal
• b.Only a fact that appears on the state's disclosure form
• c.A fact a reasonable buyer would consider important to the decision✓
• d.Only a defect a licensed inspector has already confirmed

A fact is material when a reasonable person would attach importance to it in deciding whether to buy or what to pay, usually because it affects the property's value, its desirability, or the buyer's intended use. Latent defects, hidden problems an ordinary inspection would not reveal, are the classic example, while patent defects are visible but still may never be misrepresented or papered over. The seller's discomfort does not define materiality. The state form sets a floor, not a ceiling, so known material facts it does not ask about still require disclosure. And a fact does not become immaterial merely because no inspector has verified it yet.

A lender selling a foreclosed house and a trustee selling a home neither has ever occupied both ask the broker whether they must complete the state's seller disclosure form. The broker should explain:

• a.The exemption is complete, so neither the seller nor the licensee owes disclosure
• b.The form may be excused, but known material facts must still be disclosed✓
• c.Every seller must complete the form, because these statutes admit no exceptions
• d.The exemption shifts the duty to complete the form onto the listing brokerage

Most states with a seller property disclosure statute exempt certain transfers from the form itself, commonly sales by a fiduciary such as an executor, personal representative, or trustee, and transfers by a lender after foreclosure, on the theory that the seller has no personal knowledge of the property. Which sellers qualify differs by state and must be checked against the local statute, so no single rule fits every jurisdiction. The exemption excuses paperwork, not honesty: a seller who actually knows a material fact may not conceal it, and the licensee's own duty to disclose known material facts to a buyer is unaffected. The obligation is never transferred to the brokerage by the exemption.

A seller lists a home strictly 'as is' and will make no repairs. The seller knows the foundation leaks actively, and the evidence is hidden behind finished basement walls. Does the clause protect the seller?

• a.No; known material defects must be disclosed✓
• b.Yes; an as-is clause waives every disclosure duty
• c.Yes, if the buyer had an opportunity to inspect
• d.Yes, provided the clause is printed in bold type

An 'as is' clause tells the buyer that the seller will not repair anything and that the property is taken in its present condition. It does not waive the duty to disclose known material defects, and it never excuses active concealment or an affirmative false statement. Giving the buyer an inspection opportunity does not shift the burden for a defect deliberately hidden behind finished walls, since the point of concealment is that inspection will not find it, and formatting the clause in bold cures nothing. Used honestly alongside full disclosure, 'as is' is a legitimate way to set expectations; used to bury a known hidden problem, it invites rescission and damages.

Two weeks after a home goes under contract, a heavy storm reveals a serious roof leak that neither the seller nor the agent previously knew about. What does the disclosure duty require?

• a.The newly discovered material fact must be disclosed to the buyer promptly✓
• b.The seller may simply address the leak at the final walk-through
• c.Nothing further, since disclosure closed when the contract was signed
• d.The contract must be canceled and the property relisted from scratch

The obligation to disclose material facts continues until closing, so a defect that appears or is discovered after the contract is signed must go to the buyer promptly and in writing, together with any updated disclosure statement the state requires. The buyer can then decide whether to proceed, renegotiate, ask for a repair, or use a contract right to cancel. Saving the news for the walk-through takes that choice away and is a frequent source of post-closing claims against brokers. Nothing requires the parties to tear up the contract and relist; the agreement stays in force unless a contingency or the parties themselves end it.

An agent repeats the seller's statement that the room addition was fully permitted, without checking anything, and the county's records show no permit was ever issued. This conduct is best classified as:

• a.Puffing, an opinion only
• b.Intentional fraud, which requires proof of actual knowledge
• c.Negligent misrepresentation of a material fact✓
• d.Passive concealment of a defect the agent hid on purpose

Asserting a material fact carelessly, with no idea whether it is true, is negligent misrepresentation, and the agent can be liable without any bad intent because permit status was verifiable in public records the agent chose not to check. Fraud sets a higher bar: a knowing or reckless false statement, or deliberate concealment, made to induce reliance, which these facts do not establish. Passive concealment means staying silent about a known problem, not repeating someone else's claim. Permit status is a verifiable fact rather than sales opinion, so puffing does not apply. The safe practice is to attribute the statement to its source and direct the buyer to verify it independently.

A licensee lists a single-family home built in 1962 for sale. Under the federal lead-based paint rule, what must the seller provide before the buyer is obligated under the contract?

• a.A certified laboratory result showing the home's lead levels
• b.The EPA pamphlet, known hazards and records, and a chance to test✓
• c.A signed guarantee that the home contains no lead-based paint
• d.Written proof that all lead-based paint has been removed

For target housing built before 1978 the seller must give the buyer the EPA-approved lead hazard pamphlet, disclose any known lead-based paint and lead hazards, hand over any available records or reports, and include the Lead Warning Statement with signed acknowledgments in the contract. In a sale the buyer must also be given a 10-day period, unless both sides agree to a different period, to conduct an inspection or risk assessment. Nothing in the rule obliges the seller to test the property, to remove paint, or to certify the home lead-free; the rule delivers information and opportunity. The licensee must ensure compliance and retain the signed disclosure.

A management firm handling apartments in a 1958 building asks the broker how far the federal lead-based paint disclosure rule reaches. Which statement is correct?

• a.It governs sales only and never residential rentals
• b.It applies to all housing regardless of the year it was built
• c.It reaches leases as well as sales, with narrow exemptions✓
• d.It stops applying once the unit is repainted with modern paint

The rule covers both sales and leases of target housing, so a landlord owes tenants the same pamphlet, the disclosure of known lead-based paint and hazards, and any available records and reports. The exemptions are deliberately narrow: zero-bedroom units such as studios and dormitory rooms, short-term leases of 100 days or less that cannot be renewed or extended, and housing for the elderly or persons with disabilities where no child under six resides or is expected to reside. Painting over old paint neither removes the underlying lead nor the duty to disclose it, and housing built after 1978 falls outside the rule entirely, which is why the construction date is always the first question.

The owner of a 1965 duplex hires a contractor to sand and repaint the window trim throughout an occupied unit. Under the EPA Renovation, Repair and Painting rule, the contractor must be:

• a.Licensed by the state as a general home improvement contractor
• b.Insured for lead claims by a federally approved carrier
• c.Cleared in advance by the local health department
• d.Certified by EPA and using lead-safe work practices✓

The Renovation, Repair and Painting rule requires firms that disturb painted surfaces in pre-1978 housing and child-occupied facilities to hold certification from EPA or an authorized state program, to assign certified renovators, to follow lead-safe work practices such as containment and cleaning verification, and to deliver the 'Renovate Right' pamphlet to owners and occupants. A state contractor license, a lead liability policy, or a health department sign-off does not substitute for that certification. Very small jobs below the rule's square-footage thresholds, and owners doing work on their own homes, fall outside it, but a hired contractor sanding trim in an occupied rental does not.

A buyer asks the listing agent directly whether the house has a radon problem, and the agent has no information either way. What is the appropriate response?

• a.Test the basement personally and interpret the result
• b.Assure the buyer that radon is not present in this region
• c.Recommend a radon test by a qualified professional✓
• d.Explain that radon affects only homes served by a well

Radon is a colorless, odorless radioactive gas released as uranium breaks down naturally in soil and rock, entering through foundation cracks, sumps, and slab penetrations, and it is a recognized cause of lung cancer, with EPA recommending action at four picocuries per liter. It can occur in any construction type and any region, so regional reassurance is a guess the agent cannot support, and it has nothing to do with well water, though lead can leach into drinking water from older plumbing and solder, which is a separate test. Testing and interpreting results is the specialist's job. The licensee discloses what is known, recommends qualified testing, and refers out.

While previewing a listing, an agent sees dark staining and smells a musty odor in the basement, and notices an old fill pipe suggesting a buried heating oil tank. The agent should:

• a.Say nothing, since neither observation has been confirmed
• b.Arrange remediation and tank removal before any showings
• c.Describe the staining as harmless mildew in the listing
• d.Disclose both observations and refer the parties to specialists✓

A licensee is expected to recognize the signs of a possible environmental problem, disclose what was observed, and refer the parties to qualified professionals; the licensee is not qualified to identify mold, judge whether an underground storage tank has leaked, or reassure anyone that a condition is harmless. Calling the staining mildew in the listing is an affirmative misrepresentation. Ordering remediation and tank removal casts the agent as the contractor, creating liability for the work itself and for destroying evidence of the condition. Suspected asbestos is handled the same way: note it, leave it undisturbed, and let a qualified inspector decide whether it is friable and how to manage it.

A buyer is financing a home that sits inside a FEMA-designated special flood hazard area. What follows from that designation for this transaction?

• a.The lender must reduce the loan amount by the flood risk
• b.Flood damage is already covered by a homeowners policy
• c.A federally regulated lender requires flood insurance✓
• d.The seller must pay for a private flood mitigation study

A property mapped inside a special flood hazard area triggers a flood insurance requirement on loans made, guaranteed, or regulated by the federal government, with coverage available through the National Flood Insurance Program or private carriers. Standard homeowners policies exclude flood, which regularly surprises buyers who assume otherwise. The designation neither shrinks the loan amount nor obliges the seller to fund a study. A broker should disclose known flood-zone status and any history of flooding on the property and tell the buyer to verify the current map, and should also flag that mapped wetlands can separately restrict building through federal permitting even where flooding is not the issue.

A client buys a small industrial parcel and later learns that solvents used by an operator decades earlier contaminated the soil. Under CERCLA, what is this buyer's exposure?

• a.Strict, joint and several liability as the current owner✓
• b.Limited to the cleanup share matching the years of ownership
• c.Capped at the price the buyer paid for the contaminated parcel
• d.None, because only the party that spilled the solvents pays

CERCLA, the federal Superfund law, imposes liability that is strict, meaning no fault need be shown; joint and several, meaning any one responsible party can be pursued for the entire cleanup; and retroactive, reaching conduct that occurred before the statute was enacted. Current owners are on the list of potentially responsible parties even though they spilled nothing, so liability is not confined to the original polluter, is not prorated across years owned, and is not capped at the purchase price. The innocent landowner defense, along with the bona fide prospective purchaser protection, can shield a buyer who made all appropriate inquiries into prior ownership and use before acquiring the site.

A commercial client under contract on a former dry cleaning site asks the broker what a Phase I environmental site assessment actually involves. The best answer is:

• a.Laboratory analysis of soil and groundwater samples
• b.Records, a site visit, and interviews, with no sampling✓
• c.A cleanup plan approved by the state environmental agency
• d.An appraisal adjustment reflecting the contamination found

A Phase I assessment is non-intrusive: a review of historical records and chain of title, regulatory database and map research, a walk-through of the site, and interviews with owners, occupants, and officials, all aimed at identifying recognized environmental conditions. It collects no samples. If it flags a concern, a Phase II follows and does take samples of soil, groundwater, or building materials for laboratory testing. A remediation plan comes later, if it is needed at all, and an appraisal adjustment is a valuation question rather than an assessment. Commercial buyers and their lenders order a Phase I both to price the risk and to establish the all appropriate inquiries that supports the innocent landowner defense.

A listing agent copies the square footage from the county tax record into the MLS. The figure overstates the house by 300 square feet, and after closing the buyer sues. What is the likely outcome?

• a.The agent is protected because a public record was the source
• b.The buyer is barred from suing once the sale has closed
• c.The agent may be liable for repeating an unverified figure✓
• d.The tax assessor bears sole responsibility for the error

Licensees have been held liable for passing along inaccurate measurements as though they were fact, because a buyer reasonably relies on the professional who published the number. Sourcing it to a tax record or an old listing is not an automatic defense, and it is no defense at all when the figure is presented without qualification. Buyers routinely sue after closing, so the sale ending changes nothing, and the assessor is not a party to the transaction. Safer practice is to attribute the figure to its source, state that it has not been independently measured, urge buyers to verify what matters to them, or have the space measured to a recognized standard.

A buyer asks the listing agent point blank whether a violent crime took place inside the home several years ago, and the agent knows that it did. How should the licensee handle it?

• a.Deny knowledge in order to protect the seller's privacy
• b.Never answer falsely; the disclosure rule varies by state✓
• c.Disclose it, since federal law makes such events material
• d.Answer only after the buyer's offer has been accepted

Whether a stigmatizing event such as a crime, a death, or a suicide must be volunteered is governed by state law, and the states differ sharply: some statutes declare these facts non-material and expressly protect licensees who stay silent, while others require disclosure or leave the question to case law, so no single national rule can be stated. What does not vary is that a licensee may not knowingly give a false answer to a direct question, which is misrepresentation in any state. Stalling until an offer is accepted has the same practical effect as lying. Federal law makes no such event material; it instead forbids disclosing that an occupant has HIV or AIDS, which is protected disability information.

A buyer is under contract on a condominium unit governed by an owners association. Why does delivery of the association's governing documents and budget matter before closing?

• a.They fix the mortgage interest rate the lender may charge
• b.They reveal assessments, use restrictions, and reserve funding✓
• c.They take the place of a title search on the individual unit
• d.They transfer the seller's association voting rights to the lender

Buying into a common interest community means buying a set of continuing obligations, so the declaration, bylaws, rules, current budget, assessment schedule, any pending special assessment or litigation, and the reserve study or reserve balance are all decision-relevant facts. Most states require delivery of a resale package or disclosure certificate and give the buyer a right to cancel within a period after delivery, but the required contents, the timing, and the cancellation right differ from state to state, so the licensee follows the local requirement. These documents do not set loan pricing, do not substitute for a title search of the unit and its liens, and do not move voting rights to any lender.

The seller's disclosure form on a rural listing states the septic system is sound, but the broker knows it failed an inspection last year in a sale that fell through. What must the broker do?

• a.Rely on the form, because disclosure is the seller's obligation
• b.Disclose the known septic failure independently of the seller's form✓
• c.Report the seller to the regulator before showing the home
• d.Ask the buyer to waive any septic inspection contingency

The seller's statutory disclosure statement and the broker's own duty are two separate obligations. A broker who personally knows a material fact must disclose it to the buyer even when the seller's form omits or flatly contradicts it, and cannot hide behind the client's paperwork; silence makes the firm a participant in the seller's misrepresentation. Reporting the seller to the regulator is not the immediate answer and does nothing to protect this buyer. Asking for a waiver while withholding what the broker knows compounds the wrong. Properties served by a private well and an on-site septic system should be disclosed as such, with testing and inspection recommended in every case.