September 20th, 2021 at 2:46 pm
Multiple Choice Question: Can the seller share Buyer #1’s offered price and terms with the seller’s cousin? Pick the best answer:
A. No, because Buyer #1’s offer is confidential as a matter of law.
B. No, because Buyer #1’s offer is conditioned upon confidentiality.
C. Yes, if the CND is just attached to the RPA, not incorporated by reference into the RPA.
D. Yes, because the seller has not accepted Buyer #1’s offer.
Answer: Answer A is wrong. Contrary to popular belief, the law does not require a seller or listing agent to treat a buyer’s offer as confidential. In fact, the NAR Code of Ethics specifically requires buyers’ agents to advise their buyers that the seller and listing agent might not be treating a buyer’s offer as confidential. Agents comply with that ethical requirement by giving their clients C.A.R.’s standard-form Possible Representation of More Than One Buyer or Seller (PRBS), which has a section on “Offers Not Necessarily Confidential.”
Answers B and C are also wrong. Attaching a CND to a buyer’s offer does not necessarily make the offer conditioned upon confidentiality, nor does it bind the seller. Moreover, incorporating the CND by reference in the RPA (e.g., by identifying the CND as an “Addendum” in paragraph 5 of the RPA) still does not bind the seller.
Answer D is the correct answer, with one caveat. The seller may share Buyer #1’s offer with her cousin because she has not yet agreed to the CND. The caveat is that, before sharing, the seller may want to consider giving Buyer #1 and Buyer #1’s agent some sort of head’s up to maintain a good rapport with them. After all, Buyer #1 has submitted a good offer, whereas the seller’s cousin has only expressed interest.
Practice Tip for Buyers’ Agents: Buyers who want to keep confidential their offered price and terms should submit just the CND to the seller and get it accepted before submitting the buyer’s offer. Although a seller is not obligated to agree to a CND, a buyer has better chances of getting it signed if the CND is not accompanied by the buyer’s offer.
Stay Tuned Next Week: Should a seller sign a CND?
-Thank You to Kim Rouggie O’Rourke (Calabasas Office) for suggesting this week’s legal tip!
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