Florida Broker Practice Exam

According to the Truth in Lending Act, what must occur if a developer advertises a down payment of $1,000?

1. The seller can refuse $1,000 as the down payment

2. The seller must accept $1,000 as the complete down payment

3. The advertisement must be approved by HUD

4. The seller must provide financing options

The correct answer is: The seller must accept $1,000 as the complete down payment

Under the Truth in Lending Act (TILA), when a developer advertises a specific down payment amount, such as $1,000, that amount is regarded as a representation of the terms of financing being offered. Therefore, the seller is obligated to accept the advertised down payment of $1,000 as it is part of the information being conveyed to potential buyers. This requirement is in place to protect buyers from misleading advertising practices and ensure that they can rely on the terms proclaimed in marketing materials. It's important to understand that TILA aims to promote informed use of credit by requiring clear and truthful disclosure of credit terms, including those related to down payments in advertisements. Thus, when a specific amount is mentioned, it becomes an integral part of the offer that must be honored by the seller. If a developer fails to accept the offered down payment as stated, it would potentially create an unfair practice and mislead consumers. The essence of this requirement is to maintain transparency and provide a level of assurance to prospective buyers regarding the financial terms they can expect based on the advertisement.