Declare all interests

2014-04

A client engaged an estate agent to list her property. The agent found a buyer and negotiated a selling price between both parties. When the provisional agreement for sale and purchase was about to be signed, the agent informed the client that the purchaser had authorized a representative to sign the document and to deliver the deposit on his behalf.

After the agreement had been signed, the client noticed that the purchaser named on the agreement was not the one who negotiated the price with her. She asked around and found out the purchaser was the agent’s husband. Feeling cheated, she canceled the deal and sold the property later through another agent.

The agent admitted that the original prospective purchaser suddenly decided not to buy the property and that she and her husband were looking for a place at the time. She emphasized that she had no intention to cheat her client and that the price offered was market price. However, she was disciplined by the Estate Agents Authority for failing to disclose her interests and committing a breach of trust.

The EAA’s practice circular reminds estate agents that they must not allow any personal interest to conflict with their duties to the client.

Where any potential conflict arises, the agent should make a full disclosure to the client of all relevant facts, so as to give the latter an opportunity to decide whether to continue with the proposed transaction or with the appointment of the agent.

The code of ethics also states that agents should avoid accepting an appointment involving a property in which they have a beneficial interest.