Discussion of Article 4: Disclosure of Family Interest
Case Interpretation 4-3
Realtor®, Mr. Lister, listed his client, Mr. Seller's home and subsequently advised him to accept an offer from Mr. Buyer at less than the listed price. Mr. Seller later filed a complaint with the association against Mr. Lister stating that Mr. Lister had not disclosed that Mr. Buyer was Mr. Lister's father-in-law. In addition, Mr. Seller said that Mr. Lister's strong urging had convinced him to accept an offer below the listed price; and that Mr. Lister had acted more in the interest of the buyer than in the best interest of the seller.
At the hearing, Mr. Lister defended his actions stating that Article 4, Disclosure of Family Interest, requires disclosure when the buyer is a member of the Realtor®'s immediate family, and that his father-in-law was not a member of his immediate family. Mr. Lister also demonstrated that he had presented two other offers to Mr. Seller, both lower than Mr. Buyer's offer, and stated that, in his opinion, the price paid by Mr. Buyer had been the fair market price.
Mr. Lister's defense was found by the hearing panel to be inadequate. The panel concluded that Article 4 forbids a Realtor® to "acquire an interest in" property listed with him unless the interest is disclosed to the seller or the seller's agent. Additionally, the possibility, even remote, of Mr. Lister acquiring an interest in the property from his father-in-law by inheritance gave the Realtor®, in this case, Mr. Lister, a potential interest in it. Finally, Mr. Lister's conduct was clearly contrary to the intent of Article 4, since interest in property created through a family relationship can be closer and more tangible than through a corporate relationship, as cited in the Code of Ethics as an interest requiring disclosure. Realtor®, Mr. Lister, was found to have violated Article 4 for failing to disclose to client, Mr. Seller, that Mr. Buyer was his father-in-law.
Article 4 requires that Realtors® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, any entities in which they have any ownership interest, or any real property, without making their true position known to the owner or the owner's agent. In selling property they own, or in which they have any interest, Realtors® shall reveal their ownership or interest in writing to the purchaser or the purchaser's representative.