A residential property in a rural area generates rental income from a small, self-contained apartment in the basement. This apartment was constructed without the necessary building permits and does not comply with current building codes for secondary dwelling units. The seller instructs their salesperson not to disclose the unpermitted status of the basement apartment. Which of the following is the salesperson's ethical and legal obligation?

Question: A residential property in a rural area generates rental income from a small, self-contained apartment in the basement. This apartment was constructed without the necessary building permits and does not comply with current building codes for secondary dwelling units. The seller instructs their salesperson not to disclose the unpermitted status of the basement apartment. Which of the following is the salesperson's ethical and legal obligation?

Answer options:

• Follow the seller's lawful instructions, as it is the buyer's responsibility to verify permits. ✅ Attempt to persuade the seller to disclose; if unsuccessful, the salesperson must still disclose this material fact.
• Disclose the non-compliance only if directly asked by a potential buyer or their representative.
• Report the unpermitted status to the municipal building department to protect all parties.

Correct answer: Attempt to persuade the seller to disclose; if unsuccessful, the salesperson must still disclose this material fact.

Explanation: Under REBBA 2002, a salesperson has an obligation to disclose all material facts known to them regarding a property, even if the seller has given instructions to the contrary. An unpermitted and non-code-compliant dwelling unit is clearly a material fact that could significantly impact a buyer's decision. The salesperson must attempt to persuade the seller to disclose, and if they refuse, the salesperson must still disclose it to prospective buyers.