Disclosure of Confidential Information After Agency Relationship Ends

QUESTION: I have a listing that has been for sale for approximately six months. Several months ago, a potential buyer approached me about making an offer. The seller and the potential buyer both agreed to dual agency. The buyer’s offer was rejected by the seller. Shortly thereafter, the buyer asked me to terminate the buyer agency agreement and I agreed. Now the buyer has hired another agent and made a new offer for the listed property. I have confidential information about the buyer that I believe would be useful to the seller. Am I required to share that information with my seller-client, or do I have a duty to keep the information confidential, even though my buyer agency agreement has been terminated?

ANSWER: This is one of those rare instances where the law and the Code of Ethics are in conflict. Assuming that the confidential information in your possession might influence the seller’s decision in the negotiation process, the North Carolina Real Estate Commission would likely consider that information something that an agent must disclose to his or her principal. However, such disclosure would appear to violate Article 1 of the Code of Ethics. Standard of Practice 1-9 expressly provides that the obligation of REALTORS to preserve confidential information provided by their clients in the course of any agency relationship continues after termination of that agency relationship.

What should an agent do when the law and the Code provide opposite guidance? The Preamble to the Code of Ethics answers that question. It states that “in any instance where the Code of Ethics and the law conflict, the obligation of the law must take precedence.” Under these circumstances, since the law requires the disclosure of any information that may influence your client’s decision in the transaction, you should disclose the buyer’s information with your seller-client.