If a broker learns a property will soon be rezoned and informs the seller before the sale agreement is reached, and later profits from resale, which statement is correct?

• A. It is illegal for the broker to purchase the property under any circumstances
• B. It is legal as long as the disclosure occurred before the sale agreement was reached
• C. It is legal only if the seller approves the sale after disclosure
• D. It is legal only if the seller consents after closing

Answer: (B)

The crucial idea is that a broker must not take unfair advantage of information learned through their work, but disclosing known material facts to the seller before any contract is formed can remove the conflict. If the broker learns that a property will soon be rezoned and tells the seller before a sale agreement is reached, they are fulfilling their duty to disclose material information that could affect value. With that disclosure in place and no contract yet, there’s no ongoing fiduciary trap or implied agreement that would prevent the broker from later pursuing the property themselves. Once a contract exists, the situation becomes risky for self-dealing and typically would require recusal or consent. So disclosure timing matters: pre-contract disclosure keeps the transaction on fair footing and allows the broker to proceed with a later resale legally.