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Agents Have Obligations To Honor Client Confidences

Written By: Bob Hunt
Sunday, September 11, 2016

Often, people tell their real estate agents things that they dont want others to know. These confidences may range from a price that a seller is willing to take to the fact that the principal has recently lost his job, or that his wife has contracted a serious illness.

What are the agents obligations in this regard? When we ask such a question we can be asking about legal obligations or ethical obligations. In this case, ethical obligations are both clearer and more stringent than those that are spelled out in the law. Moreover, the Code of Ethics of the National Association of REALTORS spells out obligations for its members in real estate->

First, it is >

Suppose you tell me that you and your wife have filed for divorce, and you dont want anyone to know about it. In one sense, it would seem too late for that; the toothpaste is already out of the tube. The court filing is a matter of public record; how can the information be confidential? In reality, though, we know that while the public record is accessible; it doesnt mean that many people have knowledge of whats in it.

For the most part, information is confidential, or to be treated as confidential, if the client says it is. When a seller tells his agent that he recently lost his job, that doesnt mean that no one knows of the fact. The people at the former workplace know. Rather, if he wants the information to be confidential, it means that he doesnt want it to go beyond the people who already know, or who might come to know by virtue of their particular role. At least he doesnt want people to learn of it through his agent; he the seller can still tell anyone he wants. But the agent cant.

Agents have both a legal and an ethical duty to promote their clients interests. Presumably, >

How long does the duty to maintain confidentiality last? Normally, agency obligations end when the agency is either terminated or its purpose is accomplished. If I represent a seller, my agency obligations end when escrow closes. Although it may be good business practice, and common courtesy, to continue to serve those interests for some period of time. However, for REALTORS -- those who are members of the national, state, and local Realtor associations -- that obligation extends somewhat longer. Standard of Practice 1-9 of the Realtor Code says in part that the obligation to preserve confidential information provided by their clients " continues after termination of agency >

There is an important exception to the general principles we have discussed that is spelled out in the Realtor Code of Ethics. "Information concerning latent material defects is not considered confidential information under the Code of Ethics."

In general, information is to be treated as confidential if the principal says so. But there are limits. The principal cant make an agent be party to a cover-up just by insisting that something is confidential. For example, a seller might say, "In a heavy rain, the backyard floods and sometimes leaks into the family room; but I dont want anyone to know. Keep this information confidential." No.

REALTORShave an obligation to honor a principals confidences. But they have other obligations too. Sometimes those will override the duty to maintain confidentiality.

Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way. His email address is .

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