Iowa Real Estate Practice Exam

In which situation is a seller required to provide a Residential Property Seller Disclosure Statement?

1. When the seller is listing the property with a new agent

2. When the seller is listing the property as "for sale by owner"

3. When the seller is renting out the property

4. When the seller is selling to a family member

The correct answer is: When the seller is listing the property as "for sale by owner"

The requirement for a seller to provide a Residential Property Seller Disclosure Statement arises primarily in transactions involving the sale of residential property. In Iowa, this disclosure applies to most sales to inform prospective buyers of the property's condition and any known issues. In the scenario where the seller is listing the property as "for sale by owner," it is particularly important to note that even without an agent, the seller still has an obligation to disclose material facts about the property. This requirement ensures that buyers have all relevant information to make informed decisions, protecting both the buyer and the seller legally. In contrast, when a seller is listing the property with a new agent, the agent will typically handle the disclosure process, making it more a function of agency practice rather than a strict obligation on the seller. When renting out the property, the requirement for a disclosure statement is not applicable since the disclosure statements are focused on sales, not leases. Selling to a family member may create informal expectations of disclosure but does not inherently require a formal Residential Property Seller Disclosure Statement, as the law does not differentiate based on the relationship of the parties involved in a typical residential sale.