Agent Pam represents a buyer purchasing a property in Hot Springs. After closing, the buyer discovers that Pam had a pre-existing personal friendship with the seller and had shared the buyer's negotiating strategy with the seller during the transaction, but never disclosed this relationship or her actions. Under Arkansas agency law, which of the following outcomes is most accurate?
Correct Answer
B) Pam violated her duty of disclosure and confidentiality, and may face AREC disciplinary action and civil liability
Pam committed multiple serious violations of Arkansas agency law. First, she failed to disclose a personal relationship with the seller that created a conflict of interest—a direct breach of her duty of disclosure to her buyer client. Second, she shared the buyer's confidential negotiating strategy with the seller, which is a fundamental breach of her fiduciary duty of confidentiality. Under AREC rules and Ark. Code Ann. § 17-42-101 et seq., these violations can result in disciplinary action including license suspension or revocation, civil liability to the buyer for damages, and potential disgorgement of commission. The fiduciary duty of confidentiality and the duty to disclose conflicts of interest are among the most strictly enforced obligations under Arkansas agency law.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
The fiduciary obligations owed by a listing agent to the seller, including marketing the property, presenting all offers, and protecting the seller's confidential information.
A practice where the agent or brokerage represents only one party in a transaction — either the buyer or the seller, but never both.
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