David is a Massachusetts salesperson who represents seller Linda. A buyer, Kevin, submits an offer of $420,000 on Linda's home, which is listed at $450,000. Kevin privately tells David that he can go up to $445,000 if needed. David has NOT entered into a buyer agency agreement with Kevin. Under 254 CMR 3.00, what is David's correct course of action regarding Kevin's disclosed maximum price?
Correct Answer
B) David must disclose Kevin's maximum price to Linda because David is Linda's agent and owes her fiduciary duties.
Under 254 CMR 3.00, David is Linda's seller's agent and owes her fiduciary duties, including the duty of loyalty and full disclosure of all material information. Since David has not entered into a buyer agency agreement with Kevin, Kevin is a customer, not a client. David owes Kevin honesty and fair dealing but does not owe Kevin fiduciary duties. Therefore, David must disclose Kevin's maximum price to Linda, as this is material information that serves Linda's interests in the negotiation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
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.
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