A Massachusetts broker, Howard, represents seller Ann in the sale of her home. A buyer, Rick, submits an offer through a buyer's agent. During the inspection period, Rick's buyer's agent tells Howard that Rick has discovered a minor crack in the foundation that Rick considers a dealbreaker unless Ann reduces the price by $15,000. Howard knows that Ann has already purchased another home and is under significant financial pressure to close. Howard advises Ann to accept the $15,000 reduction without informing her that the crack is considered 'minor' by Rick's own inspector and that Rick may accept a smaller reduction. Under Massachusetts law, which fiduciary duty has Howard most likely breached?
Correct Answer
B) Loyalty — Howard failed to use available information to maximize Ann's negotiating position.
Howard's duty of loyalty requires him to place Ann's interests above all others and to use all available information to benefit her position. Howard knew that Rick's own inspector characterized the crack as 'minor' and that Rick might accept a smaller reduction — information that was directly relevant to Ann's negotiating strategy. By advising Ann to accept the full $15,000 reduction without sharing this context, Howard failed to maximize Ann's position and potentially cost her money. This constitutes a breach of the duty of loyalty under Massachusetts agency law and 254 CMR 3.00.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
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