March 8th, 2021 at 3:04 pm
Multiple Choice Question: Are the seller and listing agent required to treat your buyer’s offer as confidential? Pick the best answer:
A. Yes, as a matter of both law and ethics.
B. Yes, as a matter of law only.
C. Yes, as a matter of ethics only.
D. No, as a matter of both law and ethics.
Answer: The correct answer is D. Contrary to popular belief, neither the law nor the NAR Code of Ethics require a seller or listing agent to treat a buyer’s offer as confidential.
The Law on Confidentiality: There is generally no legal duty of confidentiality absent the creation of certain fiduciary-type relationships with clients, such as the requirement imposed on doctors, attorneys, and ministers. Even real estate agents should refrain from divulging their own client’s financial position or other sensitive personal information without that client’s written consent. However, neither the seller nor the listing agent have a legal obligation to keep confidential the offers they receive from prospective buyers. After all, neither the seller nor listing agent have a fiduciary-type relationship with prospective buyers (assuming no dual agency).
The Code of Ethics on Confidentiality: There is also no ethical duty of confidentiality for sellers or listing agents. In fact, the NAR Code of Ethics specifically requires buyers’ agents to advise their buyers that the seller and listing agent may not be treating the buyers’ offers as confidential (see Standard of Practice 1-13). This required disclosure is set forth in C.A.R.’s standard-form Possible Representation of More Than One Buyer or Seller (PRBS).
Practice Tip: Buyers who want their offer treated as confidential should, before submitting their offer, ask the seller to sign C.A.R.’s standard-form Confidentiality and Non-Disclosure Agreement (CND). The seller, however, could reject that request.
-Thank you to Hamid Kharrat (Tustin Office) for suggesting this week’s legal tip!
Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.
