PSI New Jersey Real Estate State Practice Exam

A seller's property disclosure form states that there are no known material defects, but the listing licensee is aware of asbestos wrapped. What should the licensee do?

1. Disclose the existence of asbestos to all potential buyers

2. Ignore the asbestos since it's not mentioned

3. Wait for the seller to disclose it

4. Inform potential buyers only if asked

The correct answer is: Disclose the existence of asbestos to all potential buyers

Disclosing the existence of asbestos to all potential buyers is the correct action because it aligns with the ethical and legal obligations of real estate professionals to provide accurate and complete information affecting a property. Material defects, such as the presence of asbestos, can significantly impact a buyer's decision and have important implications for health and safety. As a listing licensee, the responsibility to inform potential buyers of known hazards overrides the seller’s claim of ‘no known material defects’ on their disclosure form. Ignoring the presence of asbestos would be reckless and could lead to future legal repercussions for the licensee, especially if a buyer later discovers that crucial information was withheld that could have influenced their purchase decision. In this scenario, it is important for the licensee to proactively disclose the asbestos to ensure transparency in the transaction and protect both the buyer's interests and the reputation of the real estate profession. This duty not only fosters trust but also helps to mitigate future liability that may arise from failing to disclose known hazards.