Which of the following best describes the duty of disclosure in a real estate transaction?

The duty of disclosure in a real estate transaction primarily involves agents and sellers being transparent about any known issues or defects associated with the property. This obligation is grounded in the principle that all parties involved in a transaction have the right to make informed decisions based on accurate information. When agents disclose known issues, it not only protects the buyer but also upholds the integrity of the real estate profession.

In many jurisdictions, including Texas, real estate agents have a fiduciary duty to act in their clients' best interests, which encompasses openly revealing any significant problems with the property that could influence a buyer's decision. By doing so, agents help to foster trust and transparency, which are essential components of successful real estate transactions. This duty extends to issues such as structural defects, pest infestations, or environmental hazards that could impact the property’s value or the safety of its occupants.

In contrast, the other options highlight misconceptions about disclosure requirements. While both parties' financial capabilities may be relevant to a transaction, mandatory disclosure of financial status is not typically a part of the disclosure duty. Disclosure is seldom optional; most states have laws requiring certain disclosures. Moreover, the notion that only the seller bears the responsibility for disclosing defects is misleading, as agents also have a duty to