Massachusetts broker Lisa represents seller Dan. Dan's property is under agreement with buyer Pam, whose buyer's agent is from another brokerage. Three days before closing, Pam's agent contacts Lisa and reveals that Pam has lost her job and may not qualify for her mortgage, but asks Lisa to keep this information confidential 'between agents.' Lisa does not inform Dan of this development. The deal falls through at closing when Pam's financing is denied. Under Massachusetts agency law, which of the following most accurately describes Lisa's conduct?
Correct Answer
A) Lisa breached her fiduciary duty of disclosure to Dan by withholding material information about the buyer's financing status.
Lisa is Dan's seller's agent and owes Dan the fiduciary duty of disclosure — she must inform Dan of all material facts relevant to the transaction. Pam's potential inability to obtain financing is unquestionably a material fact that could affect whether the transaction closes. There is no 'inter-agent confidentiality' principle under Massachusetts law that overrides a seller's agent's fiduciary duty to the client. By honoring the other agent's request and withholding this critical information from Dan, Lisa breached her duty of disclosure and loyalty under 254 CMR 3.00 and Massachusetts 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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