PSI New Jersey Real Estate State Practice Exam

What liability does a broker face due to misrepresentation in the listing?

1. No liability if the buyer is represented

2. Potential legal repercussions depending on the case

3. Liability is automatically transferred to the seller

4. No consequences if it was unintentional

The correct answer is: Potential legal repercussions depending on the case

When a broker is involved in misrepresentation during a listing, they can face potential legal repercussions, which can vary based on the specifics of the case. This accountability stems from the broker's duty to provide accurate information and to act in the best interests of their clients. In instances of misrepresentation, the broker may be found liable if it is determined that they should have known that the information provided was false or misleading, or if they made statements that they knew were untrue. Factors that influence liability include the nature of the misrepresentation, whether it was negligent or intentional, and the extent to which the misrepresentation affected the transaction. Therefore, potential legal repercussions are a fundamental aspect of a broker’s responsibilities, setting the stage for accountability in real estate dealings. Other choices reflect misunderstandings about a broker's liability. For instance, claiming no liability when the buyer has representation overlooks the broker's obligation under agency law. The option suggesting automatic liability transfer to the seller misrepresents the responsibility of the broker; they cannot merely shift liability without accountability of their own actions. Lastly, stating there are no consequences if the misrepresentation was unintentional negates the idea that negligence can still lead to liability if a reasonable standard of care was not observed.