A real estate salesperson, Sarah, acting as a buyer's agent, discovers during due diligence for her client that the property's septic system has an outstanding work order from the local health authority, requiring significant and costly repairs. The seller's agent, knowing of the issue but hoping it wouldn't be discovered, explicitly stated in the listing information that the septic system was 'recently inspected and in good working order.' After verbally informing her client, Sarah's client instructs her to proceed with a low offer conditional on a satisfactory septic inspection, but to avoid directly mentioning the outstanding work order to the seller's agent in the initial offer to maintain negotiating leverage. Which of the following best describes Sarah's ethical obligations under REBBA 2002?

Question: A real estate salesperson, Sarah, acting as a buyer's agent, discovers during due diligence for her client that the property's septic system has an outstanding work order from the local health authority, requiring significant and costly repairs. The seller's agent, knowing of the issue but hoping it wouldn't be discovered, explicitly stated in the listing information that the septic system was 'recently inspected and in good working order.' After verbally informing her client, Sarah's client instructs her to proceed with a low offer conditional on a satisfactory septic inspection, but to avoid directly mentioning the outstanding work order to the seller's agent in the initial offer to maintain negotiating leverage. Which of the following best describes Sarah's ethical obligations under REBBA 2002?

Answer options:

• Sarah must inform the seller's agent about the outstanding work order, as withholding this material fact would be a misrepresentation by omission, even if it harms her client's negotiating position.
• Sarah should follow her client's instructions, as her primary duty is to her client's best interests, and disclosing the work order prematurely would undermine their strategy.
• Sarah is only obligated to disclose the outstanding work order if the seller's agent directly asks her about specific issues related to the septic system. ✅ Sarah should advise her client that she cannot comply with the request because it would require her to participate in a potential misrepresentation, and she must withdraw from the representation if the client insists.

Correct answer: Sarah should advise her client that she cannot comply with the request because it would require her to participate in a potential misrepresentation, and she must withdraw from the representation if the client insists.

Explanation: Sarah cannot participate in or condone a misrepresentation. While she owes duties to her client, she also has a duty to deal fairly, honestly, and with integrity with all parties, and must not knowingly be a party to any fraud, dishonesty, or illegal act, as per the REBBA 2002 Code of Ethics. Directly or indirectly withholding material information known to be contrary to a representation made by the seller's agent would put her in this position; therefore, she must advise her client of her inability to comply and potentially withdraw if the client insists on a course of action that violates her ethical duties.