Agent Sullivan represents buyer Chen in Iowa. During negotiations, Agent Sullivan learns from the seller's agent that the seller has received another offer and will likely accept it unless Chen responds within 24 hours. Agent Sullivan also learns that Chen has recently been approved for a much larger mortgage than the current offer price. The seller's agent asks Sullivan to confirm Chen's maximum loan approval amount to help the seller evaluate the competing offers. Under Iowa agency law, how should Agent Sullivan respond?
Correct Answer
C) Sullivan must decline to disclose Chen's maximum loan approval because it is confidential client information protected by the buyer's agent's fiduciary duty of confidentiality
Agent Sullivan owes a fiduciary duty of confidentiality to buyer Chen. Chen's maximum mortgage approval amount is confidential client information that directly affects Chen's negotiating position. Disclosing this information to the seller's agent would harm Chen's interests by revealing the buyer's financial ceiling, potentially enabling the seller to demand a higher price. Iowa Code Chapter 543B establishes that a buyer's agent must protect the buyer's confidential information throughout the transaction. Sullivan must decline to disclose this information, even under pressure from the seller's agent. Sullivan should instead advise Chen of the competing offer situation and let Chen decide how to respond.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
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