Material Defect
A known defect in a property's condition that must be disclosed, and which confidentiality does not cover.
A material defect is a known problem with the condition of the property significant enough to affect a reasonable party's decision. Disclosure of a known material defect is owed to all parties, including a customer the license holder does not represent.
In intermediary practice the point is sharper still: Sec. 1101.651(d)(3)(C) carves information materially relating to the condition of the property out of the confidentiality prohibition.
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- Confidential Information
A party's negotiating position, which an intermediary may not disclose to the other side without written authorization.
- Customer
The party on the other side of a transaction, who is not represented by the broker but is still owed honesty and material-defect disclosure.
- Client
The party a broker represents in a transaction, owed the duties that come with representation.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.