Indiana Law Shields Sellers From Stigma Disclosure

Indiana's exam covers a set of disclosure rules, agency structures, and recovery fund limits that diverge from national standards in ways that consistently catch candidates off guard.

The IREC governs real estate licensing in Indiana. The Pearson VUE exam tests 50 state specific questions alongside 80 national questions, with a minimum passing score of 75%. Indiana's stigma disclosure shield has a critical written-request exception, its in-house agency structure can produce unintended dual agency, and its seller disclosure exemptions work opposite to what most candidates expect. These are the three places where Indiana law diverges sharply from what national prep teaches, and where the exam collects the most points from underprepared candidates. The exam doesn't reward overthinking, but it absolutely punishes assuming Indiana works the same as every other Midwest state.

Psychologically Impacted Properties

Indiana's stigma disclosure statute is a three-part rule: no duty to disclose, no liability for silence, and the right to refuse to answer. Intentional misrepresentation to any direct inquiry is still a violation, though. Candidates who know only the first part fail the scenarios built around the third. Here's the thing most people miss: "you can refuse to answer" is a very different legal position from "you can lie," and the exam is specifically designed to test whether you know that.

Indiana law protects sellers and agents from liability for failing to disclose deaths, HIV/AIDS, or felony history, but agents may not intentionally misrepresent in response to a direct inquiry, and they have the right to refuse to answer, a three-part rule that trips up candidates.

Indiana's rule on psychologically impacted properties, that licensees aren't required to disclose stigmatizing events, appears in different forms in neighboring states. The Ohio exam tests its own stigmatized property statute, and Kentucky handles the topic under consumer protection law, each with different thresholds than Indiana sets.

The Pearson VUE exam will describe a scenario where a buyer asks directly whether someone died in the home. Know that a licensee can decline to answer, but can't affirmatively state that nothing happened. That distinction between refusal and misrepresentation is the line the IREC exam is designed to test.

In-House Agency

Indiana's in-house agency structure can create unintended dual agency when two licensees from the same brokerage each represent a different party to the same transaction. The exam tests whether candidates recognize that this scenario requires disclosure and consent, not just internal firm coordination.

An in-house agency relationship arises when two clients are represented by different licensees within the same brokerage, the exam tests whether this creates a dual agency (it can), what disclosures are required, and how it differs from designated agency.

Know the difference between in-house agency and designated agency under Indiana law. In designated agency, each licensee owes full duties to their respective client and the firm is the dual agent. In-house agency without a designated agency structure can leave the brokerage in an undisclosed dual agency position. The IREC exam will present a brokerage scenario and ask which relationship type exists and what the disclosure obligation is. The answer depends on whether Indiana's designated agency option was properly elected.

Seller Disclosure (Exemptions)

Indiana's seller disclosure exemptions are counterintuitive. The transactions most people assume are disclosure-exempt, "as is" sales and absentee owners who never occupied the property, are not exempt. The transactions that feel like routine sales, foreclosures and court-ordered transfers, often are.

Indiana requires disclosure for 1-4 unit residential properties, but court ordered transfers, foreclosures, and fiduciary transfers are exempt, while "as is" sales and "never lived there" situations are NOT, which is the wrong answer most candidates choose.

Memorize the exemption list: court-ordered transfers, foreclosures, estate sales where the personal representative never occupied the property, and transfers between co-owners. Then confirm that "as is" isn't on that list, and that an absentee owner who never lived in the property still must disclose based on what they know. The Pearson VUE exam builds scenarios specifically designed to catch candidates who assume the "never lived there" situation removes the disclosure obligation. I know, I know, another exemption list that works backwards from what you'd expect. But this one actually matters on the exam.