What should a licensee do upon discovering a latent defect in a property?

When a licensee discovers a latent defect in a property, discussing the defect with the seller and informing prospective buyers is the appropriate action to take. This approach is aligned with ethical standards and legal obligations in real estate transactions.

Latent defects are issues that are not readily visible or discoverable upon ordinary inspection, meaning they can significantly affect the value of the property or the buyer's decision. Full disclosure is essential in maintaining trust and transparency in a transaction. By discussing the defect with the seller, the licensee ensures that the seller understands the importance of disclosing the issue. Moreover, informing prospective buyers fosters an environment of honesty, allowing them to make fully informed decisions.

Failure to disclose such information could lead to legal ramifications for the licensee and the seller, including potential lawsuits after the sale if the defect leads to costly repairs or safety hazards. Hence, option B is not only the ethical choice but also the legally sound course of action.