What is the exam-ready distinction?
| Official syllabus topic | Property Disclosures: Material Facts, Adverse Conditions, and Licensee Duties |
|---|---|
| Official PSI area | Property Disclosures |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Material fact | Material defect |
|---|---|---|
| Scope | Information important enough to affect a reasonable transaction decision | Adverse physical or legal condition affecting property or its use |
| Relationship | Can concern property, transaction, parties, title, use, or another relevant matter | Can be a material fact, but not every material fact is a physical defect |
| Example | A pending zoning action materially affecting intended use | Known hidden structural movement |
| Disclosure analysis | Depends on law, role, knowledge, contract, and discoverability | Depends on the same factors plus the condition and inspection facts |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A listing broker actually knows that a concealed foundation failure affects safe occupancy and is not visible during ordinary showings.
Reason it through. The structural condition is a defect, and its severity makes it a material fact. Actual knowledge and hidden nature activate the disclosure analysis.
Answer. Treat it as a material defect and material fact subject to the applicable Georgia disclosure duty.
Common exam traps
- Using material fact and defect as exact synonyms
- Assuming only physical facts can be material
- Ignoring actual knowledge
- Assuming a buyer inspection automatically erases every disclosure duty
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A county has scheduled a hearing on a rezoning that would bar the home business a buyer plans to run from a listed house. The house itself has no physical problems. How should the rezoning information be classified?
- A. A material fact that is not a physical defect
- B. A material defect in the property's physical condition
- C. An immaterial fact, since it involves no physical condition
- D. An immaterial fact, since it concerns only the buyer's plans
Show answer and explanation →
Answer: A. A material fact that is not a physical defect
A material fact is any information important enough to affect a reasonable person's decision, and a pending zoning action that would block the intended use qualifies. It is not a physical defect, which shows the two terms are not synonyms. The plausible error is assuming only physical conditions can be material.
Question 2A listing broker actually knows that a house has a concealed foundation failure that affects safe occupancy and cannot be seen during showings. The seller tells the broker to say nothing. What does Georgia's brokerage law require?
- A. Keep the condition confidential as the seller's information
- B. Disclose the known hidden condition to prospective buyers
- C. Say nothing, since buyers are expected to hire inspectors
- D. Disclose the condition only if a buyer asks about it
Show answer and explanation →
Answer: B. Disclose the known hidden condition to prospective buyers
Under BRRETA, a seller's broker must disclose adverse physical conditions the broker actually knows about that a reasonably diligent inspection would not reveal. A concealed foundation failure the broker knows about fits that duty, and the seller's instruction cannot override it. Confidentiality is the wrong choice, but it does not cover known hidden physical defects.
Question 3After closing, a buyer finds rotted subflooring hidden under carpet. Nothing shows the seller's broker ever knew about it. What is the broker's strongest answer to a claim of nondisclosure?
- A. The buyer had the chance to order a home inspection
- B. Rotted subflooring is a defect rather than a material fact
- C. The broker had no actual knowledge of the condition
- D. The seller never asked the broker to disclose anything
Show answer and explanation →
Answer: C. The broker had no actual knowledge of the condition
Georgia's disclosure duty for a seller's broker turns on adverse conditions the broker actually knew about. With no evidence of knowledge, the duty was never triggered. Pointing to the buyer's inspection looks plausible, but an inspection opportunity does not by itself erase a disclosure duty, and a hidden defect can still be a material fact.
Ready to move on?
You have this distinction down when all of these are true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one key fact.
- Explain the rule or fact that makes each distractor wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with Latent Defect Versus Patent Defect. Next, latent versus patent defect separates conditions a reasonable inspection would not reveal from those open to view, which is the discoverability question that shapes the disclosure duty covered here.
Return to the complete exam-concept library or the Property Disclosures hub.