California Real Estate SalespersonLaws of Agency and Fiduciary DutiesHard
Broker Alvarez's exclusive listing with a seller expires without a sale. Two months later, Alvarez begins representing a different buyer client and negotiates that buyer's purchase of the very same property from the same seller. During the earlier listing, Alvarez had learned that the seller was under significant financial pressure and would accept far less than the asking price. May Alvarez disclose or use that information to help the new buyer negotiate a lower price?
- ANo, because the duty of confidentiality regarding a former client's confidential information survives termination of the agency
- BYes, but only if Alvarez first obtains verbal permission from the former seller
- CYes, because the prior agency has terminated and Alvarez no longer owes any duties to the former seller
- DNo, but only because using such information would constitute an antitrust violation
Show answer & explanationAnswer & explanation
Correct answer: A. No, because the duty of confidentiality regarding a former client's confidential information survives termination of the agency
The fiduciary duty of confidentiality regarding a client's confidential information (such as their financial condition or motivation to sell) survives the termination of the agency relationship. Alvarez may not disclose or use the seller's confidential information for the benefit of a new client, even though the listing has expired and a new agency now exists.
Why the other options are wrong
- B. Incorrect—verbal permission is not the standard; the duty simply continues regardless unless the former client freely and knowingly waives it.
- C. Incorrect—most duties end at termination, but confidentiality regarding sensitive information learned during the agency continues indefinitely.
- D. Incorrect—this scenario involves fiduciary confidentiality, not antitrust/price-fixing concerns.
Post-Termination Confidentiality
An agent's duty to keep a former client's confidential information private continues even after the agency relationship has ended.
- Confidentiality is one of the few fiduciary duties that outlasts termination of agency
- Applies to information such as financial condition, motivation, or negotiating limits
- Using such information to benefit a new client is a breach of fiduciary duty
Memory trick: Secrets don't expire when the contract does.