Course: A buyer's agent in Indiana is preparing an offer for their client. They discover that the seller has not disclosed a known material defect on the property disclosure form. What should the buyer's agent do? (EN)

Number of Chapters: 1

Course Content

1 Chapter: A buyer's agent in Indiana is preparing an offer for their client. They discover that the seller has not disclosed a known material defect on the property disclosure form. What should the buyer's agent do? (EN)

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Introduction: Undisclosed Material Defects and Fiduciary Duty in Indiana Real Estate Transactions
This chapter addresses a critical juncture in real estate transactions: the discovery of undisclosed material defects by a buyer's agent in Indiana prior to offer submission. The scientific importance of this topic lies in its direct impact on information asymmetry, market efficiency, and the ethical responsibilities underpinning the real estate profession. Real estate markets function optimally when information is freely and accurately disseminated. Undisclosed material defects represent a significant information asymmetry, potentially leading to adverse selection and market inefficiencies as buyers lack the knowledge necessary to accurately assess property value and risk. This, in turn, can undermine market stability and erode consumer confidence.
Indiana law mandates specific disclosure requirements for sellers, codified primarily in Indiana Code § 32-21-5. These regulations are designed to mitigate information asymmetry and promote fair dealing. Failure to disclose known material defects constitutes a breach of these legal obligations and can expose sellers to legal liability. From the buyer's perspective, such omissions represent a potential financial risk and could impact their long-term investment.
The buyer's agent occupies a position of fiduciary responsibility, obligated to act in the best interests of their client. This fiduciary duty necessitates a proactive and ethical approach when confronted with evidence of undisclosed material defects. The scientific underpinnings of this fiduciary duty are rooted in agency theory, which examines the relationship between a principal (the buyer) and an agent (the buyer's representative) and seeks to minimize agency costs arising from potential conflicts of interest or information asymmetry.
This chapter aims to provide a scientifically informed and legally grounded framework for buyer's agents to navigate situations involving undisclosed material defects. Upon completion of this chapter, participants will be able to:
1. Identify and classify material defects as defined by Indiana law and real estate practice, understanding the criteria that distinguish a defect requiring disclosure.
1. Analyze the legal and ethical implications of a seller's failure to disclose known material defects, referencing relevant Indiana Code sections and professional codes of conduct.
1. Evaluate the agent's fiduciary duty in the context of undisclosed defects, including the scope of their responsibility to investigate, advise, and protect their client's interests.
1. Formulate and justify a strategic response to the discovery of undisclosed material defects, considering the available options (e.g., further investigation, communication with the listing agent, advising the client to seek legal counsel, adjusting the offer, or terminating the agreement).
1. Apply principles of risk assessment and mitigation to inform decision-making, prioritizing the client's financial and legal well-being while upholding professional ethical standards.
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Course: A buyer's agent in Indiana is preparing an offer for their client. They discover that the seller has not disclosed a known material defect on the property disclosure form. What should the buyer's agent do? (EN)

Course Content

1 Chapter: A buyer's agent in Indiana is preparing an offer for their client. They discover that the seller has not disclosed a known material defect on the property disclosure form. What should the buyer's agent do? (EN)

Introduction: Undisclosed Material Defects and Fiduciary Duty in Indiana Real Estate Transactions