Conflicts of Interest in Real Estate

Flashcards about conflicts of interest in real estate

Conflict of Interest in Real Estate

A situation that undermines impartiality and adversely affects the representation relationship between a client and the brokerage, or its licensees.

Who Real Estate Licensees Represent

They represent the brokerage they are registered with, not the client directly. All representation responsibilities lie between the brokerage and the client.

How a Conflict of Interest Impairs Agency Responsibilities

It prevents the brokerage and its licensees from fulfilling agency duties owed to clients due to conflicting interests that vary by situation.

Three Types of Conflict Circumstances in Real Estate

1. Competing Interests 2. Opposing Interests 3. Brokerage Interests

Competing Interests

When clients represented by the same brokerage compete with each other in a transaction (e.g., two buyers for the same property).

Opposing Interests

When clients represented by the same brokerage have opposite goals in a transaction (e.g., buyer vs. seller on price).

Brokerage Interests

When the brokerage's interest conflicts with a client's interest. This can be direct (e.g., a licensee wants to buy a client's property) or indirect (e.g., a lawyer affiliated with the brokerage wants to buy it).

Attributed Knowledge in Common Law Brokerage Relationships

It is the assumption that all licensees in a brokerage share client information and are presumed to know all confidential client matters.

Why Attributed Knowledge is a Problem in Multiple-Client Transactions

It prevents the brokerage from fulfilling agency duties to each client independently due to shared access to confidential information.