A commercial broker represents a landlord in leasing office space. During negotiations, the tenant discloses to the broker that she would pay up to $35 per square foot, even though the listed rate is $30. What must the broker do with this information?
Correct Answer
D) Disclose it to the landlord, because the broker's duties run to the landlord
The broker acts for the landlord, and what the tenant let slip is material to the rent the landlord can hold out for, so the duty of disclosure requires passing it on. Other choices: keeping it confidential treats the tenant as the client, which is the one thing the broker is not; ignoring it because it was disclosed casually reads a formality requirement into a duty that has none; and using it to negotiate a better deal for the tenant inverts the agency altogether, and would cost the landlord the five dollars a square foot the tenant had already conceded.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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