Read Get the Facts including the Legal Hotline Q & A
Get the Facts is a Membership update sent to Washington REALTOR® members and contacts each Tuesday.  
Click here if you are having trouble viewing this message.
Weekly Membership Newsletter
June 19, 2018 • Stay Connected!

QUESTION:  Our firm had a listing 2 years ago that was cancelled because Seller changed his mind about selling. During the term of the listing agreement, Seller gave Listing Broker invoices/receipts from foundation work performed but never asked for them back. Fast forward to present day, Seller is now listed with a different firm and a Buyer Broker with our firm has asked the FORMER Listing Broker (with our firm) what she knows about the foundation. How would you advise our Listing Broker?

ANSWER:   It is important to remember that while listing broker was a sub-agent of the firm, representing seller, the firm's designated broker was the seller's agent. This distinction is important to answering this question because now, fast forward to today, and designated broker is also the agent for the new buyer but DB is no longer representing seller. There are two Agency Law duties that survive termination of an agency relationship: the duty to account for the client's money and property entrusted to agent's care and the duty to retain the client's confidences. Arguably, both duties are triggered in this case.
With respect to the new buyer, DB not only owes the duty of loyalty to this buyer, which prohibits DB from taking any action that is adverse or detrimental to buyer's interest in the transaction, but DB also owes the duty to disclose "Material Facts," a duty that is owing to all parties in all transactions. Accordingly, even when DB represented seller, DB still owed a duty to any buyer of seller's property, to disclose "Material Facts".
This question should seek advice for DB in handling this transaction. This is actually not a question confronting the former listing broker because former listing broker owes no duty to the new buyer. Designated broker, however, owes remaining duties of confidentiality and accounting for money and property to seller and owes a duty of loyalty and to disclose "Material Facts" to buyer.
Determining how DB should proceed requires a refresher related to definitions of "Confidential Information" and "Material Facts," both of which are defined by the Agency Law, RCW 18.86.010.
"'Material fact' means information that substantially adversely affects the value of the property or a party's ability to perform its obligations in a real estate transaction, or operates to materially impair or defeat the purpose of the transaction. ..." RCW 18.86.010(9).
"'Confidential information' means information from or concerning a principal of a broker that: (a) Was acquired by the broker during the course of an agency relationship with the principal; (b) The principal reasonably expects to be kept confidential; (c) The principal has not disclosed or authorized to be disclosed to third parties; (d) Would, if disclosed, operate to the detriment of the principal; and (e) The principal personally would not be obligated to disclose to the other party. RCW 18.86.010(7).
The first issue requiring analysis concerns the information revealed by the invoices and receipts. The question says: "Seller gave Listing Broker invoices/receipts from foundation work performed ...." Do those invoices and receipts reveal "information that substantially adversely affects the value of the property"? If they do, then that information constitutes a material fact. Designated broker owes a duty to disclose "Material Facts" to buyer.
While considering the DB's duty to disclose Material Facts, it is also important to determine whether the information revealed by the receipts and invoices is "Confidential Information". To constitute Confidential Information, the information must satisfy all five prongs of the Agency Law definition of "Confidential Information". In this case, the analysis may begin and end with "(e) The principal personally would not be obligated to disclose to the other party." If the information is "information that substantially adversely affects the value of the property" then seller probably has an obligation to disclose that information to buyer and thus, the information is not "Confidential Information".
With respect to disclosure of the information set forth in the receipts and invoices, if it is "information that substantially adversely affects the value of the property" then the information is a Material Fact, it is not Confidential Information and it must be revealed to the new buyer. IF the information is not "information that substantially adversely affects the value of the property" then the information does not constitute a "Material Fact" and neither seller nor DB are obligated to share the information with buyer.
But, if it is determined that the information must be shared with buyer, then sharing the information with buyer is not the same thing as giving the actual invoices and receipts to buyer. When considering that question, DB must consider the other duty remaining to all former clients and that is the duty to "[T]o account in a timely manner for all money and property received from or on behalf of either party...." RCW 18.86.030(e). The receipts and invoices are, at least arguably, personal property of the seller. There is no statutory duty owing by DB to buyer that compels DB to give the actual invoices and receipts to buyer. For that reason, the duty that compels DB to account to seller with respect to that personal property entrusted to DB probably weighs in favor of not giving the actual (or copies) of the receipts/invoices to buyer even though information learned from those invoices and receipts, if that information constitutes "information that substantially adversely affects the value of the property" will be shared with buyer.
If the information is not "information that substantially adversely affects the value of the property" but buyer just wants to know that information anyway, then DB should ask seller for permission to share the receipts and invoices or information from the receipts and invoices, with buyer. Chances are, if the information is not adverse, seller will not object to sharing the information with buyer. If the information is adverse, then DB has a duty to disclose the information to buyer, even over seller's objection.


The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to . Please tell us your NRDS number when you e-mail the Hotline with your question.


Thank you, Corporate Sponsors!

  VHT Studios

Call For Action: Flood Insurance
REALTORS®, action is needed! The National Flood Insurance Program (NFIP) will expire on July 31, denying necessary insurance coverage to homeowners and buyers in more than 20,000 communities nationwide. Congress must act now to reform and extend the NFIP. Take less than a minute out of your day to take action...
More →
State of the Nation's Housing Report Highlights Racial Disparity in Homeownership
(Source: Joint Center for Housing Studies of Harvard University) Between 1994 and 2016, black homeownership rates increased by just 0.3% while white homeownership rates rose 2.2%, widening the black-white gap to 29.2%.
More →
NAR Applauds Rule Making Realtors® Eligible to Participate in Association Health Plans
(Source: National Association of REALTORS®) The U.S Department of Labor today finalized its rule to expand the definition of “employer” to include “working owners,” allowing real estate professionals and other self-employed individuals to participate in association health plans.
More →
Commission Opportunity
Spokane Commissioner Cate Moye's second term will expire August 14, 2018. The Washington REALTORS® are encouraging interested members from east of the Cascade Mountains to submit a letter of interest, resume and a completed application to serve on the Washington Real Estate Commission. Contact for more information on how to apply
Contact →
Client Share: 4 Ways a High-Tech Kitchen Will Survive Design Fads
(Source: REALTORMagazine) If your clients want to renovate their kitchens, help them consider high-tech features to make the space timeless. “We upgrade our phones every year, yet we’re reluctant to outfit our kitchens with technology that will ensure they last the next decade of fads,” according to Innit, a food technology company. Innit offers the following tips on “future-proofing” a kitchen remodel.
More →
3 FB Ad Tips for Real Estate
(Source: YPN Lounge) Today I’m going to share with you three things that I don’t think a whole lot of people are telling you about when it comes to Facebook ads. Tip number one: run awareness campaigns. What do I mean by that? Well, I think a lot of times when it comes to Facebook ads...
More →
Primary Mortgage Rates Survey
(updated every Thursday)  Source:  Freddie Mac
 June 14, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.62%  4.07%  3.83%
 Fees & Points  0.4
 Margin  N/A  N/A  2.77

 June 7, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.54%  4.01%  3.74%
 Fees & Points  0.5
 Margin  N/A  N/A  2.77

 May 31, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.56%  4.06%  3.80%
 Fees & Points  0.4
 Margin  N/A  N/A  2.77

 May 24, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.66%  4.15%  3.87%
 Fees & Points  0.4
 Margin  N/A  N/A  2.77

 May 17, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.61%  4.08%  3.82%
 Fees & Points  0.4
 Margin  N/A  N/A  2.77

Date Class Location CE  
26-JUN NAR Code of EthicsBellingham3.0More info...
27-JUN NAR Code of EthicsOlympia3.0More info...
29-JUN NAR Code of EthicsPuyallup3.0More info...
26-JULY NAR Code of EthicsKennewick3.0More info...
16-AUG The Hotline Vs. The Bottom LineSpokane7.5More info...
16-AUG NAR Code of Ethics WebinarWebinar3.0More info...
23-AUG CORE & MoreLongview7.5More info...

More Classes →

Heads Up! Code of Ethics Cycle Ending
REALTORS® are required to complete ethics training within two-year cycles and the deadline for the current cycle is December 31, 2018. Training may be completed through your local REALTOR® association, via one of upcoming WR webinars (stay tuned for dates) or you can take it online. A few online options include NAR's online training or Interact CE's Ethics Adventure
More →

Expires on: 11:59PM PST 06/30/2018 
Promo Code: RELAX  Expires on: 11:59PM PST 06/30/2018 Discount amount: 27%  Restrictions: Cannot be combined with any other offer. Can use as entire cart discount or individual products. Unlimited use until expiration date. Does not apply to Ethics Adventure products.