(Originally Case #7-2. Revised May, 1988. Transferred to Article 1 November, 1994. Cross-reference Case #2-18. Revised May 2017 and November, 2022.)
As the exclusive agent of Client A, REALTOR® B offered Client A’s house for sale, advertising it as being located near a public transportation stop. Prospect C, who explained that his daily schedule made it necessary for him to have a house near the public transportation stop, was shown Client A’s property, liked it, and made a deposit. Two days later, REALTOR® B read a notice that the transportation running near Client A’s house was being discontinued. He informed Prospect C of this, and Prospect C responded that he was no longer interested in Client A’s house since the availability of public transportation was essential to him. REALTOR® B informed Client A and recommended that Prospect C’s deposit be returned.
Client A reluctantly complied with REALTOR® B’s recommendation but then complained to the Association of REALTORS® that REALTOR® B had not faithfully protected and promoted his interests; that after Prospect C had expressed his willingness to buy, REALTOR® B should not have made a disclosure that killed the sale since the point was not of major importance. The new transportation route, he showed, would put a stop within six blocks of the property.
In a hearing before a Hearing Panel of the Association’s Professional Standards Committee, REALTOR® B explained that in advertising Client A’s property, the fact that a transportation stop was less than a block from the property had been prominently featured. He also made the point that Prospect C, in consulting with him, had emphasized that Prospect C’s physical disability necessitated a home near a transportation stop. Thus, in his judgment, the change in routing materially changed the characteristics of the property in the eyes of the prospective buyer, and he felt under his obligation to give honest treatment to all parties in the transaction, that he should inform Prospect C, and that in so doing he was not violating his obligation to his client.
The Hearing Panel concluded that REALTOR® B had not violated Article 1, but had acted properly under both the spirit and the letter of the Code of Ethics. The panel noted that the decision to refund Prospect C’s deposit was made by the seller, Client A, even though the listing broker, REALTOR® B, had suggested that it was only fair due to the change in circumstances.
Source: The National Association of REALTORS® Code of Ethics and Arbitration Manual. Case Interpretations, March 2024.