Any fact that could reasonably affect a buyer's decision to purchase or the price they are willing to pay.
Why Material Fact matters on the exam
This term belongs to Property Disclosures. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Material Fact
Every Freehold question shows why the right answer is right — and cites its source.
A salesperson misrepresents a material fact about a property to a buyer while acting within the normal scope of their duties for the brokerage. Under the doctrine underlying vicarious liability, who besides the salesperson may be held liable?
No one else, since only the salesperson made the statement
The employing or supervising broker, along with the salesperson
The buyer's own agent, regardless of involvement
The state licensing board automatically
Show answer & explanation
The employing or supervising broker, along with the salesperson — Under respondeat superior, an employing or supervising broker can be held liable for a salesperson's misconduct that occurs within the scope of representing a client on the broker's behalf.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
A listing agent describes a property as having 'amazing curb appeal' in the marketing remarks. This statement is best characterized as:
Puffing, an expression of subjective opinion rather than a factual claim, and generally not actionable
Fraud, since such statements generally and directly influence a reasonable buyer's own purchasing decision
Negligent misrepresentation of a material fact about the property's condition
A fiduciary breach owed to the buyer, who relied on the listing agent's description of the home's exterior
Show answer & explanation
Puffing, an expression of subjective opinion rather than a factual claim, and generally not actionable — Puffing consists of subjective, exaggerated opinions used in sales talk, like praising curb appeal, which are not factual claims and are not legally actionable as misrepresentation.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
Fraud in a real estate transaction differs from an innocent misrepresentation primarily because fraud requires:
Any statement made in complete and total good faith that later simply turns out to have been inaccurate
The intentional and knowing making of a false statement of material fact with intent to deceive
A written, rather than a spoken, false statement made about the property at issue, regardless of whether the speaker intended to deceive anyone
The involvement of a state-licensed appraiser somewhere in the transaction itself
Show answer & explanation
The intentional and knowing making of a false statement of material fact with intent to deceive — Fraud requires knowingly making a false statement of material fact with the intent to deceive and induce reliance, unlike an innocent misrepresentation made without that intent.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
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