National Real Estate Exam (PSI)General Principles of AgencyHard
A listing agreement expires after the home fails to sell. Two months later, the former agent runs into a friend at a social event and mentions that the former seller is getting divorced and desperately needs to sell quickly, which the friend then uses to negotiate an aggressively low offer when purchasing the home directly from the seller. Which duty has the former agent most clearly violated?
- ADuty of obedience, which survives termination of agency
- BDuty of accounting, which requires ongoing reporting after termination
- CNo duty was violated because the agency had already terminated
- DDuty of confidentiality, which survives termination of the agency relationship
Show answer & explanationAnswer & explanation
Correct answer: D. Duty of confidentiality, which survives termination of the agency relationship
The fiduciary duty of confidentiality continues even after the agency relationship terminates. Disclosing confidential information learned during the agency, such as the seller's motivation to sell quickly, breaches this ongoing duty even though the listing had already expired.
Why the other options are wrong
- A. Obedience requires following lawful instructions during an active agency and does not survive termination.
- B. Accounting concerns handling of funds and documents, not disclosure of personal information.
- C. A duty was violated because confidentiality survives even after the listing agreement expires.
Post-Termination Duty of Confidentiality
An agent's duty to protect a former client's confidential information continues indefinitely, even after the agency relationship ends.
- Survives termination of listing or buyer agency
- Applies to information gained during the agency, like motivation to sell
- Violation can lead to liability even without an active agency
Memory trick: Confidentiality never expires, even when the contract does.