A real estate licensee is assisting a buyer interested in a condominium unit. The buyer has received the Estoppel Certificate, which shows no outstanding arrears, but the Reserve Fund Study indicates a potential reserve fund deficit requiring a significant special levy in the next two years. What advice should the licensee provide regarding this information?

Question: A real estate licensee is assisting a buyer interested in a condominium unit. The buyer has received the Estoppel Certificate, which shows no outstanding arrears, but the Reserve Fund Study indicates a potential reserve fund deficit requiring a significant special levy in the next two years. What advice should the licensee provide regarding this information?

Answer options:

• Advise the buyer that the Estoppel Certificate is the final word on finances, and the Reserve Fund Study is merely a guideline.
• Recommend proceeding with the purchase as special levies are rare and may not materialize.
• Suggest a condition in the purchase contract allowing the buyer to withdraw if a special levy is imposed before closing. ✅ Explain that the potential special levy is a material fact that could significantly impact future costs and recommend further due diligence, potentially seeking legal advice.

Correct answer: Explain that the potential special levy is a material fact that could significantly impact future costs and recommend further due diligence, potentially seeking legal advice.

Explanation: The Reserve Fund Study provides foresight into future expenses, and a potential special levy is a material fact that directly affects the buyer's future financial obligations. The licensee must advise further due diligence and possibly legal counsel to understand the implications of such a significant future cost, even if current finances are clear on the Estoppel Certificate.