Maria, a real estate associate, learns that her client, Mr. Chen, is in arrears on his mortgage payments on the property he has listed for sale. This information comes from a conversation with Mr. Chen's financial advisor, who mentioned it in passing during a casual social gathering. What is Maria's obligation regarding this information?

Question: Maria, a real estate associate, learns that her client, Mr. Chen, is in arrears on his mortgage payments on the property he has listed for sale. This information comes from a conversation with Mr. Chen's financial advisor, who mentioned it in passing during a casual social gathering. What is Maria's obligation regarding this information?

Answer options:

• Maria must disclose this information to prospective buyers, as it is a material fact about the property. ✅ Maria must keep this information confidential, as it relates to her client's personal financial situation and was obtained through a casual conversation, not directly from Mr. Chen for the purpose of the transaction.
• Maria should advise Mr. Chen to disclose this to potential buyers or lenders.
• Maria should inform her broker of the situation so they can decide how to proceed.

Correct answer: Maria must keep this information confidential, as it relates to her client's personal financial situation and was obtained through a casual conversation, not directly from Mr. Chen for the purpose of the transaction.

Explanation: Maria has a duty of confidentiality to her client, Mr. Chen. Information regarding a client's personal financial situation, especially obtained informally, is confidential. Disclosure to third parties would breach this duty, as Mr. Chen's mortgage arrears are not a material latent defect of the property itself.