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Code of Ethics Case Studies

Case #1-6: Fidelity to Client's Interest

REALTOR® A managed an apartment building owned by Client B. In his capacity as property manager, REALTOR® A received a written offer to purchase the building from Buyer C. REALTOR® 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 REALTOR® A and asked for the details.

Client B then filed a complaint against REALTOR® A with the local Board of REALTORS® charging failure to represent and promote his interests. His complaint specified that while REALTOR® A had been engaged as a property manager, REALTOR® A had at no time told him not to submit any offers to buy. Furthermore, in the absence of any discussion on this point, Client B felt that REALTOR® A should have recognized a professional obligation to acquaint Client B with Buyer C's offer, which Client B stated in the complaint, was definitely attractive to him.

REALTOR® A was notified of the complaint and directed to appear before a panel of the Board's Professional Standards Committee. In his defense, REALTOR® A stated that his only relationship with Client B was as 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; and that in advising Buyer C that the property was not on the market, REALTOR® A felt that he was protecting his client against an attempt to take the Client's time in discussing a transaction, which REALTOR® A felt sure would not interest the Client.

Based on your understanding of the Code of Ethics Article 1, what do you think the hearing panel concluded? Show Answer