Legal Blog - Standards and Ethics


Violating Article 1

Aug 23, 2016

Standards and Ethics

A Case of Ethics: When Is The Agent Representing Seller?

Article 1 - "When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation of absolute fidelity to the client's interests is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly

Case # 1-8: Fidelity to Client's Interests
REALTOR® Andrews managed an apartment building owned by his client Mr. Butler. In his capacity as property manager, REALTOR® Andrews received a written offer to purchase the building from a prospective buyer Mr. Curtis. REALTOR® Andrews responded that the building was not for sale. A few days later the prospective buyer Mr. Curtis met the owner Mr. Butler and told him that he thought he had made an attractive offer through his agent, and indicated that he would be interested in knowing what price would interest him. The owner answered that he had received no offer through his agent Mr. Andrews and asked for the details.

Mr. Butler then filed a complaint against REALTOR® Andrews with the local Association of REALTORS® charging failure to represent and promote his interests. His complaint specified that while Mr. Andrews had been engaged as a property manager, he had at no time told him not to submit any offers, to buy, and that in the absence of any discussion whatever on this point he felt that REALTOR® Andrews should have recognized a professional obligation to acquaint him with the prospective buyer's offer which, he stated in the complaint, was definitely attractive to him.

REALTOR® Andrews was notified of the complaint and directed to appear before a panel of the Association's Professional Standards Committee. In his defense, Mr. Andrews stated that his only relationship with his client Mr. Butler was as a property manager under the terms of a management contract; that he had not been engaged as a broker; that at no time had the client ever indicated an interest in selling the building; that in advising the buyer Mr. Curtis that the property was not on the market, he felt that he was protecting his client against an attempt to take his time in discussing a transaction which he felt sure would not interest him.

Was REALTOR® Andrews in violation of Article 1?

It was the conclusion of the Hearing Panel that REALTOR® Andrews was in violation of Article 1; that in the absence of any instructions not to submit offers, he should have recognized that absolute fidelity to his client's interest, as required under Article 1 of the Code of Ethics, obligated him to acquaint his client with a definite offer to buy the property, and that any real estate investor would obviously wish to know of such an offer.
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