Oct. 8, 2005 - Case #1-2: Honest Treatment of All Parties

Case #1-2: Honest Treatment of All Parties (Originally Case #7-2. Revised May, 1988. Transferred to Article 1 November, 1994. Cross-reference Case #2-18.)

As the exclusive agent of Client A, REALTORŪ B offered Client As house for sale, advertising it as being located near a bus stop. Prospect C, who explained that his daily schedule made it necessary for him to have a house near the bus stop, was shown Client As property, liked it, and made a deposit. Two days later, REALTORŪ B read a notice that the bus line running near Client As house was being discontinued. He informed Prospect C of this, and Prospect C responded that he was no longer interested in Client Cs house since the availability of bus transportation was essential to him. REALTORŪ B informed Client A and recommended that Prospect Cs deposit be returned.

Client A reluctantly complied with REALTORŪ Bs recommendation, but then complained to the Board of REALTORSŪ that REALTORŪ B had not faithfully protected and promoted his interests; that after Prospect C had expressed his willingness to buy, REALTORŪ B should not have made a disclosure that killed the sale since the point actually was not of major importance. The new bus route, he showed, would put a stop within six blocks of the property.

In a hearing before a Hearing Panel of the Boards Professional Standards Committee, REALTORŪ B explained that in advertising Client As property, the fact that a bus stop was less than a block from the property had been prominently featured. He also made the point that Prospect C, in consulting with him, had emphasized that Prospect Cs physical disability necessitated a home near a bus stop. Thus, in his judgment, the change in bus routing materially changed the characteristics of the property in the eyes of the prospective buyer, and he felt under his obligation to give honest treatment to all parties in the transaction, that he should inform Prospect C, and that in so doing he was not violating his obligation to his client.

The Hearing Panel concluded that REALTORŪ B had not violated Article 1, but had acted properly under both the spirit and the letter of the Code of Ethics. The panel noted that the decision to refund Prospect Cs deposit was made by the seller, Client A, even though the listing broker, REALTORŪ B, had suggested that it was only fair due to the change in circumstances.