Broker Ellen at Sunrise Realty in Massachusetts has a listing agreement with seller Dan. Buyer Carol is working with salesperson Mike, who is also at Sunrise Realty. The broker designates Mike to represent Carol and another salesperson, Lisa, to represent Dan. Both Carol and Dan sign written designated agency consent forms. During the transaction, Mike overhears a conversation in the office in which Dan's salesperson Lisa tells another colleague that Dan is desperate to sell and will accept any offer above $400,000, well below the $520,000 listing price. Mike now wants to share this information with Carol. Under Massachusetts designated agency rules, what is the most accurate statement about Mike's obligations?
Correct Answer
C) Mike must not share the information with Carol because Dan's confidential negotiating position must be protected even in a designated agency arrangement
Under 254 CMR 3.00, designated agency allows each designated agent to advocate fully for their respective client, but the brokerage as a whole still owes duties to both parties. Dan's confidential negotiating floor — his willingness to accept any offer above $400,000 — is confidential information belonging to Dan and Lisa's representation. Even though Mike is Carol's designated advocate, he cannot use or disclose confidential information that was obtained through the brokerage's representation of Dan. The designated agency structure creates an information barrier (sometimes called a 'Chinese wall') that Mike must respect. Using this information would breach Dan's confidentiality and could expose the brokerage to liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A relationship where a listing broker authorizes other brokers to act as agents of the seller, extending the seller's agency relationship to cooperating brokers.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
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