10.18 Conflict of Interest

Company policy prohibits any conduct in which a conflict of interest exists or could arise. Examples of these situations are as follows:

• Information relating to confidential matters gained from the principal cannot be disclosed. Thus, a seller’s agent cannot disclose the financial condition of the seller, the seller’s willingness to take a lesser price, the seller’s desperation to sell, etc., unless specifically authorized to do so by the seller.

• The duty of loyalty requires an agent to disclose his/her interest in a property that is for sale, or to disclose that he/she is making an offer on a property for his/her own account.

• The duty of loyalty prohibits a divided agency, also known as an undisclosed dual agency, where an agent acts on the account of an adverse party without the principal’s knowledge or consent. The issues regarding an undisclosed dual agency are discussed later in detail.

• The duty of loyalty prohibits competing with the principal on the agent’s own account, or for another, in matters relating to the subject of the agency. A common example of this prohibited conduct would be a licensee taking an underpriced listing and then personally purchasing that property with full knowledge that the property is underpriced and the intent of making a gain.