Housing and Community Development (HCD) Practice Exam

Under what condition must disclosure of material facts be made?

1. When the dealer feels it necessary

2. When the customer explicitly asks for it

3. If there is a reason to believe the facts are not known to the buyer

4. Disclosures are not required at any time

The correct answer is: If there is a reason to believe the facts are not known to the buyer

Disclosure of material facts is required when there is a reason to believe that the buyer does not know those facts. This principle is rooted in the idea of promoting transparency and honesty in transactions, particularly in real estate and housing. Material facts are significant aspects of a property that could influence a buyer's decision, such as structural issues, outstanding liens, or zoning violations. In a transaction, if a seller or dealer is aware of such facts, they have a responsibility to disclose them to ensure that the buyer can make an informed decision. This obligation helps to prevent deceit and builds trust between all parties involved. It acknowledges that the seller is in a better position to know the details regarding the property than the buyer, who may not have the same level of access to information. The other options do not encapsulate the legal and ethical obligations related to the disclosure of material facts in a real estate context. For instance, if disclosures were made only at the discretion of the dealer or in response to specific inquiries from the customer, it could lead to significant issues of misinformation and deception in the marketplace. Hence, the correct premise emphasizes the seller's duty to disclose when they are aware that the buyer lacks that critical information.