In any Listing Agreement there is a point in time when the agency relationship ends.

A Listing Agreement, as it is widely recognized, is none other than a contract between the rightful titleholder of an interest in land (the ‘Principal’) and a duly licensed real estate organization (the ‘Agent’), whereby the company stipulates and agrees to acquire a Buyer within a specified timeframe who is ready, willing and able to buy the interest in land that is the subject matter of the contract even though acting within the realm of the authority that the Principal confers onto the Agent, and wherein furthermore the titleholder stipulates and agrees to pay a commission ought to the licensee ever be efficient in discovering such Buyer.

As in all contracts, there is implied in a Listing Agreement an element which is commonly know at law as an ‘implied covenant of exceptional faith and fair dealings’. This covenant is a general assumption of the law that the parties to the contract – in this case the titleholder and the licensed real estate firm – will deal fairly with each other and that they will not trigger every single other to suffer damages by either breaking their words or otherwise breach their respective and mutual contractual obligations, express and implied. A breach of this implied covenant gives rise to liability both in contract law and, depending on the circumstances, in tort as well.

Due to the particular nature of a Listing Agreement, the Courts have lengthy for the reason that ruled that throughout the term of the agency relationship there is implied in the contract a second element that arises out of the a significant number of duties and responsibilities of the Agent towards the Principal: a duty of confidentiality, which obligates an Agent acting exclusively for a Seller or for a Buyer, or a Dual Agent acting for both parties under the provisions of a Limited Dual Agency Agreement, to maintain confidential specific facts supplied by the Principal. Like for the implied covenant of very great faith and fair dealings, a breach of this duty of confidentiality gives rise to liability both in contract law and, depending on the circumstances, in tort as well.

Pursuant to a recent option of the Real estate Council of British Columbia (http://www.recbc.ca/) , the regulatory body empowered with the mandate to protect the interest of the public in matters involving Real estate, a question now arises as to regardless of whether or not or not the duty of confidentiality extends beyond the expiration or otherwise termination of the Listing Agreement.

In a recent case the Real estate Council reprimanded two licensees and a real estate organization for breaching a continuing duty of confidentiality, which the Real estate Council discovered was owing to the Seller of a property. In this case the subject property was listed for sale for over two years. Throughout the term of the Listing Agreement the price of the property was decreased on two occasions. This notwithstanding, the property ultimately did not sell and the listing expired.

Following the expiration of the listing the Seller entered into three separate ‘fee agreements’ with the real estate firm. On all three occasions the Seller declined agency representation, and the business was identified as ‘Buyer’s Agent’ in these fee agreements. A party commenced a lawsuit as against the Seller, which was related to the subject property.

The lawyer acting for the Plaintiff approached the real estate corporation and requested that they provide Affidavits containing facts about the listing of the property. This lawyer made it very clear that if the corporation did not supply the Affidavits voluntarily, he would either subpoena the firm and the licensees as witnesses to give evidence prior to the Judge, or he would locate a Court Order pursuant to the Rules Of Court compelling the provider to give such evidence. The real estate organization, believing there was no other choice in the matter, promptly complied by supplying the requested Affidavits.

As a direct and proximate result, the Seller filed a complaint with the Real estate Council maintaining that the info contained in the Affidavits was ‘confidential’ and that the company had breached a duty of confidentiality owing to the Seller. As it turned out, the Affidavits were by no means employed in the court proceedings.

The real estate brokerage, on the other hand, took the position that any duty of confidentiality arising from the agency relationship ended with the expiration of the Listing Agreement. The company argued, moreover, that even if there was a duty of continuing confidentiality such duty would not preclude or otherwise limit the evidence that the real estate brokerage would be compelled to give under a subpoena or in a technique under the Rules Of Court. And, finally, the realty business pointed out that there is no such factor as a realtor-client privilege, and that in the instant circumstances the Seller could not have prevented the provider from giving evidence in the lawsuit.

The Real estate Council did not accept the line of defence and maintained that there exists a continuing duty of confidentiality, which extends after the expiration of the Listing Agreement. Council ruled that by offering the Affidavits both the brokerage and the two licensee had breached this duty.

The attorney-client privilege is a legal concept that protects communications between a client and the attorney and keeps those communications confidential. There are limitations to the attorney-client privilege, like for instance the fact that the privilege protects the confidential communication but not the underlying facts. For instance, if a client has previously disclosed confidential information to a third party who is not an attorney, and then gives the identical information to an attorney, the attorney-client privilege will still protect the communication to the attorney, but will not protect the data supplied to the third party.

For the reason that of this, an analogy can be drawn in the case of a realtor-client privilege throughout the existence of a Listing Agreement, whereby confidential information is disclosed to a third party such as a Real estate Board for publication under the terms of a Many Listings Service agreement, but not prior to such data and info is disclosed to the real estate brokerage. In this instance the privilege theoretically would protect the confidential communication as well as the underlying info.

And as to regardless of whether or not or not the duty of confidentiality extends past the termination of a Listing Agreement is still a matter of open debate, again in the case of an attorney-client privilege there is ample legal authority to support the position that such privilege does in fact extend indefinitely, so that arguably an analogy can be inferred as well respecting the duration of the duty of confidentiality that the Agent owes the Seller, to the extent that such duty extends indefinitely.

This, in a synopsis, appears to be the position taken by the Real estate Council of British Columbia in this matter.

Clearly, regardless of whether or not the duty of confidentiality that stems out of a Listing Agreement survives the termination of the contract is problematic to the Real estate profession in terms of practical applications. If, for instance, a listing with Brokerage A expires and the Seller re-lists with Brokerage B, if there is a continuing duty of confidentiality on the part of Brokerage A, in the absence of express consent on the part of the Seller a Realtor of Brokerage A could not act as a Buyer’s Agent for the buy of the Seller’s property, if this was re-listed by Brokerage B. All of which, as a result, would fly right in the face of all the rules of professional cooperation between real estate firms and their representatives. In fact, this approach could potentially destabilize the entire foundation of the Many Listings Service system.

In the absence of specific guidelines, until this entire matter is clarified maybe the most successful course of action for real estate firms and licensees when requested by a lawyer to provide info that is confidential, is to respond that the brokerage will seek to locate the crucial consent from the client and, if that consent is not forthcoming, that the lawyer will have to take the vital legal actions to compel the disclosure of such information.

Luigi Frascati is a Real estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real estate Chronicle where you can obtain the full collection of his articles on Real estate Economics and Finance. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

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