What must a broker disclose when aware of water damage in a property?

B is the correct choice because a broker has a legal and ethical obligation to disclose material facts about a property that could affect a buyer's or tenant's decision-making. In this case, water damage is a significant concern that can impact safety, structural integrity, and repair costs. By disclosing the water damage, the broker ensures that potential buyers or tenants are fully informed about the condition of the property.

It is important to note that while the broker must reveal the existence of the water damage, the status of tenants who may currently occupy the property is not typically considered a material fact that needs to be disclosed for the purpose of a sale or lease agreement. The protection of tenant privacy is also a key consideration here, which is why the status of current tenants does not need to be disclosed to prospective buyers or renters.