Agent Sued for Failure to Disclose Offer and Provide Access to Property

By Lisa Scoble posted 23 days ago

  

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The Situation

A real estate agent agreed to list and sell a residential property. The agent had an interested buyer, and an offer was accepted on the property.

Subsequently, a neighbor was denied access to view the property after he said he would pay $85,000 more than the original offer. The seller claimed the agent was negligent in not making the property accessible and demanded the difference in the selling price. 


The Problem
The agent had never dealt with the seller but was familiar with the buyer. The relationship the agent had with the buyer would later create an issue, because the agent failed to give access to the neighbor and failed to inform the seller of the increased offer.

 

The Mistake
The agent should have disclosed his relationship with the buyer to the seller. The agent should have given the neighbor access to the property and conveyed the increased offer from the neighbor to the seller.


The Result
Several months after closing, the seller found out from the neighbor that he had made an increased offer of $85,000 over the asking price, but he was never given access to the property by the agent. Following document production and depositions, the evidence revealed the agent had favored the buyer—a violation of agency law.

Experts lined up to testify, and the agent eventually settled with the seller for $40,000 plus attorney fees.


Prevention
Agency or breach of fiduciary duty allegations typically arise following a problem with a transaction. Many of the disputes involve claims of undisclosed dual agency.

Although ethical codes mandate agency disclosures, laws governing this issue are different in each state. You should always be aware of agency laws in your state to minimize the potential claims alleging breach of fiduciary duty and disclosure issues.

It's important to exercise fair and equal treatment to both sides of the transaction. Avoid dual agency if possible, since it is very difficult to be fully loyal to both parties.

If you must agree to dual agency, fully disclose the status to the purchaser and seller in writing with a reminder that no confidences can be maintained. Always provide a full disclosure of information.

This article was produced in conjunction with XL Catlin and is not to be taken as legal advice.

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Comments

16 days ago

​Thank you for your comment, Anna.  You are so right.  Anytime an agent decides NOT to present an offer to the seller they should know they are setting themselves up for problems that could result in loss of  the agent's time, money, and reputation.

16 days ago

Always disclose and present all offers to the seller.

16 days ago

Always disclose and present all offers to the seller.