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Case #1-24: Advantage Gained Through Deception of Client

Published Monday, February 3, 2014 9:00 am

The following Case Study was produced by the Professional Standards Committee of the National Association of REALTORS®. 

(Originally Case #4-3. Revised and transferred to Article 6 as Case #6-5 May, 1988. Revised November, 1993. Transferred to Article 1 November, 1994. Revised November, 1997.)

Client X listed his unique parcel of land on a lake exclusively with Realtor® A, who worked diligently for months to sell Client X’s property. Finally, Realtor® A came up with the idea of selling the property to the county for a park, and made arrangements for its presentation at a special meeting.

Client X went before the County Commissioners with his attorney. Realtor® A, the listing broker, was in the audience. Realtor® A commented about the property and told the County Commissioners that if the County purchased the property he, Realtor® A, would receive a real estate commission. The County Commissioners agreed to take the matter under advisement.

Realtor® B, a member of the County Commission, approached Client X and suggested that if the property were listed with Realtor® B exclusively, and Realtor® B then cooperated with Realtor® A so that the real estate commission would be split between them, the County would probably purchase the property from Client X. Otherwise, Realtor® B indicated, the County would not purchase it. Unknown to Client X, the County Commissioners had already voted to buy the land. Worried that he might not sell the land, Client X immediately signed a second written exclusive listing with Realtor® B. Thereafter, a sales contract was executed which provided that the real estate commission was to be divided equally between Realtor® A and Realtor® B. Unknown to Realtor® B, Client X had told Realtor® A the entire story about Realtor® B’s approach to and conversation with Client X.

Realtor® A filed a complaint against Realtor® B alleging violations of Article 1 and Article 16. The Grievance Committee found enough evidence of Realtor® B’s alleged violations of the Code to warrant a hearing before a Hearing Panel of the Board’s Professional Standards Committee.

At the hearing, Realtor® B defended himself, indicating that he had been instrumental in influencing the County Commission to vote to buy Client X’s land, and had voted for it himself. Accordingly, Realtor® B felt it was appropriate for him to receive a commission.

It was the Hearing Panel’s conclusion that Realtor® B had used his official position as County Commissioner to deceive Client X with respect to the prospects of the County purchasing his property, and had coerced Client X into executing an exclusive listing while the property was already listed exclusively with Realtor® A. The Hearing Panel found Realtor® B in violation of Article 1 for having advised Client X dishonestly and Article 16 for having acted inconsistently with the exclusive relationship that existed between Client X and Realtor® A.

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