Michigan broker Dana represents seller Kevin in the sale of a residential property in Saginaw. Buyer Theresa, who is unrepresented, submits an offer. During negotiations, Theresa asks Dana: 'What is the lowest price Kevin will accept?' Dana knows Kevin's minimum acceptable price is $210,000, well below the $235,000 list price. Under Michigan agency law, which of the following BEST describes Dana's obligations?
Correct Answer
D) Dana must refuse to answer and disclose to Theresa that she represents Kevin, so Theresa understands Dana cannot share that information
This question tests the intersection of two Michigan agency obligations. Dana owes Kevin a fiduciary duty of confidentiality, which means she cannot disclose Kevin's minimum acceptable price — this is privileged client information. However, Dana also owes Theresa (as an unrepresented party) the duty of honest dealing and must not deceive her. The correct approach is to decline to answer Theresa's question and affirmatively disclose that she represents Kevin, so Theresa understands that Dana's duties run to the seller and that Theresa should seek independent representation if she wants advocacy. Dana can be honest without breaching confidentiality by simply explaining the limits of her role.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
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