Source: http://blog.aaronline.com/2018/06/22/agency-relationships-brokers-duties/
Timestamp: 2019-04-24 11:52:36+00:00

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Recommend to a client that the client seek appropriate counsel from insurance, legal, tax, and accounting professionals regarding the risks of pre-possession or post-possession of a property.
Delivering possession prior to close of escrow unless expressly instructed to do so by the seller.
Question: During a listing presentation, the seller divulges what could be considered confidential information to the broker. The seller does not enter into a listing agreement with the broker, but lists the property with another brokerage firm. Is an implied agency created?
An implied agency must be based on facts such as to imply an intention to create the agency, and the implication must arise from a natural and reasonable, and not from a forced, strained, or distorted, construction of them. They must lead to the reasonable conclusion that mutual assent exists, and be such as naturally lead another to believe in and to rely on the agency.
See also, Walter v. Moore, 700 P.2d 1219 (Wyo. 1985).
When applying these concepts to a listing presentation, a court would likely find no implied agency. Generally, a listing presentation alone does not include the intent to create an agency relationship. Further, the mutual assent necessary to create an agency relationship would generally not occur until the seller agreed to list the property with the broker and an express agency relationship was entered into. Thus, an implied agency is not created in a listing presentation, unless the broker demonstrates an intention to create an agency relationship and the seller consents.
To avoid this situation, and any implied agency, a broker could explain to the seller early in the listing presentation that no agency relationship will exist until the seller enters into a listing agreement with the broker. Until that time, no information disclosed by the seller should be considered confidential.
Question: The seller has insisted on listing the property at a list price that is above the listing broker’s comparable price opinion because the seller believes that the property is worth the price. Should the listing broker provide the buyer with information that is public knowledge or is a matter of public record, such as comparables, when that information is detrimental to the seller’s interest?
Answer: Probably not. A listing broker is an agent with fiduciary duties to the seller. See e.g., Haymes v. Rogers, 70 Ariz. 257, 219 P.2d 339 (1950) (a real estate broker employed to sell property owes the duty of utmost good faith and loyalty to his principal and a fiduciary relationship exits).
A listing broker is obligated to exercise reasonable care to effect a sale to the best advantage of the seller; i.e., secure the best terms at the best price obtainable. See e.g., Vivian Arnold Realty Co. v. McCormick, 19 Ariz. App. 289, 506 P.2d 1074 (1973); Morley v. J. Pagel Realty, 27 Ariz. App. 62, 550 P.2d 1104 (1976) (broker has duty to effect a sale for seller on best terms possible); Meerdink v. Krieger, 550 P.2d 42 (Wash. App. 1976) (broker has a duty to exercise reasonable care, skill, and judgment in securing best bargain possible).
Despite this fiduciary duty to the seller, the listing broker is obligated to disclose known information to the buyer that materially and adversely affects the consideration to be paid for the property. See Lombardo v. Albu, 199 Ariz. 97, 14 P.3d 288 (2000); A.A.C. R4-28-1101(B).
Disclosure of opinions of value is also excluded in the warranty sections of the AAR contracts.
Therefore, the listing broker should not be legally obligated to disclose the comparables to the buyer. Further, if the disclosure would prevent the listing broker from effecting a sale to the best advantage of the seller, the listing broker would breach a duty to the seller by disclosing the information, unless, of course, the broker obtains the seller’s consent.
This post is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

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