Oct. 8, 2005 - Case #1-6: Fidelity to Client Interests

Case #1-6: Fidelity to Clients Interests (Originally Case #7-7. Reaffirmed May, 1988. Transferred to Article 1 November, 1994. Revised November, 2001.)

REALTORŪ A managed an apartment building owned by Client B. In his capacity as property manager, REALTORŪ A received a written offer to purchase the building from Buyer C. REALTORŪ A responded that the building was not for sale. A few days later Buyer C met Client B 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 Client B. Client B answered that he had received no offer through REALTORŪ A and asked for the details.

Client B then filed a complaint against REALTORŪ A with the local Board of REALTORŪ charging failure to represent and promote his interests. His complaint specified that while REALTORŪ A 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 REALTORŪ A should have recognized a professional obligation to acquaint him with Buyer Cs offer which, he stated in the complaint, was definitely attractive to him.

REALTORŪ A was notified of the complaint and directed to appear before a panel of the Boards Professional Standards Committee. In his defense, REALTORŪ A stated that his only relationship with Client B was 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 Buyer C 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.

It was the conclusion of the Hearing Panel that REALTORŪ A was in violation of Article 1; that in the absence of any instructions not to submit offers, he should have recognized that fidelity to his clients 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.