Though he found himself in an odd predicament where he got paid a little from the tenant rep, if you agreed to pay him 5%, you might want to consider honoring that or at least telling him that you are willing to pay the difference between what he got paid by the tenant rep and your traditional fee of 5%. 

There's nothing more destructive to morale and productivity of a society than the mindset you're espousing.

Great question, I am in this same predicament.

Some landlords would rather let their property deteriorate and fall to the ground over investing a penny into keeping it in good shape and they may also have a very different understanding of what is morally right and wrong all while sitting on millions of dollars of equity.

I immediately contacted the listing agent and told her that we would cooperate fully if she wanted to pursue legal action.That buyer was VERY lucky that the seller didn't sue him, but he was in a photo-finish with a criminal complaint.I think the moral of the story is to be squeaky clean in everything you do.

If you were in my predicament, what option would you take?

Moral of the story, don't give up on the lead. 

I don’t need to spell that out here, I know you can connect the dots.The moral of the story today is one that has been repeated over and over again throughout the ages – Cash is King.

Not disclosing these latent defects actually may put you in quite the predicament.

Moral of the story: focus on increasing your income!