Tennessee affiliate broker Diane has been representing the Yamamotos as buyer's agents for several months. The Yamamotos find a home they love and submit an offer. Diane later learns that the listing broker's firm is offering a significantly higher co-broke commission if the property closes before the end of the month. Diane does not disclose this incentive to the Yamamotos and begins pushing them to waive the inspection contingency to speed up the closing. What has Diane violated?
Correct Answer
B) The duty of loyalty and the duty of disclosure, by prioritizing her financial incentive over her clients' interests and concealing a material conflict
Under Tenn. Code Ann. § 62-13-401 et seq., Diane has violated both the duty of loyalty and the duty of disclosure. The duty of loyalty prohibits placing her own financial interests (the higher commission) above the Yamamotos' best interests (their right to an inspection). The duty of disclosure requires her to inform the Yamamotos of the financial incentive because it creates a conflict of interest that is material to the agency relationship. Both violations occurred simultaneously.
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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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