New Jersey Real Estate Exam Practice Question
An owner who lives out of state contacts a licensee who is in the state where the owner's property is located. The owner hires the licensee to sell the property for $160,000. The licensee realizes that the land is in an area that has recently been rezoned for a higher use. The licensee decides to buy the property, and informs the owner. After purchasing the property and, 3 weeks later, the licensee sells the same property for $175,000. Which of the following statements about this situation is correct?
Correct Answer: C
Rationale: In this scenario, informing the owner about the zoning change is crucial. The licensee has a fiduciary duty to disclose material facts that could affect the property's value, which includes the rezoning. Not doing so compromises the ethical responsibility owed to the owner.
Option A is incorrect because the licensee can act on behalf of an out-of-state owner, provided they comply with state laws, but this does not negate the need for transparency regarding property conditions.
Option B misinterprets legal obligations; the licensee is not required to disclose the selling price to the owner post-sale.
Option D is misleading as simply informing the owner of the intention to purchase is insufficient without disclosing the zoning change, which is a significant factor in the property's value.
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