Humber/Ontario Real Estate Course 3 Exam Practice

Which of the following correctly describes a material fact in a real estate transaction?

1. It is a hidden defect known by the buyer but not disclosed.

2. It significantly affects the buyer's decision to buy the property.

3. It includes personal preferences of the buyer.

4. It does not need to be disclosed if the seller requests confidentiality.

5. It primarily refers to aesthetic aspects of the property.

6. It is irrelevant to the final sale price of the property.

The correct answer is: It significantly affects the buyer's decision to buy the property.

The correct answer highlights the essence of a material fact in a real estate transaction—it is something that significantly influences a buyer's decision to purchase a property. This means that if the fact were known, it would likely change the buyer’s choice or the offered price of the property. Material facts can encompass various aspects, including structural issues, zoning laws, or any other information that could affect the buyer's perception of value or desirability. In contrast, options that suggest the buyer's personal preferences, such as aesthetic aspects, or that imply confidentiality would lead to a lack of disclosure do not align with the definition of material facts. Additionally, a hidden defect known only to the buyer does not constitute a material fact since it is not something that can influence their decision if it remains undisclosed. Understanding that a material fact is fundamentally about the buyer's informed decision-making underlines the importance of transparency in real estate transactions.