Real Estate Agents & Privacy (or is it Secrecy?)

[Author – Tim ODwyer]

What do you do when your property has been listed for sale and your agent refuses, on the basis of the Privacy Act, to give you the names of prospective buyers introduced to your property? Well, you stick it right up your agent as clients of mine recently did.

These folk had listed their home with a local agent who was a member of the Real Estate Institute of Queensland (REIQ). Their listing agreement with the agent, unusually, did not provide for a sole or exclusive agency. Rather, it was an open listing which meant my clients had the contractual right to try to sell their home themselves. So, while their agent showed buyers through the property, my clients placed their own adverts on the Internet and dealt with a number of consequential private enquiries. When one of these Internet buyers offered to buy at the right price, a private sale was negotiated subject to the parties’ solicitors finalizing formal and binding contracts.

While I was taking instructions on the proposed sale contract, I asked my clients if their property had been listed with an agent. I wanted to ensure that there would be no risk of any agent’s commission claim down the track. The clients told me what they had done and handed me a copy of their open listing agreement. After showing them the fine print, which stipulated how the agent would legally become entitled to commission if the agent was the “effective cause” of any sale, no matter when it occurred, I explained to my clients what this essentially meant: Commission would be payable on their private sale if the agent had, in fact, introduced their buyer to the property. Hence I advised that it was important for them to ask the agent to provide them with the names of all prospective buyers introduced by the agent. Hopefully their Internet buyer would not be on the list but, if he was, they would need to renegotiate their sale price to allow for the agent’s legal commission entitlement.

“No way will I give you any buyers’ details,” said the agent in effect. The formal rely to his clients’ email was courteous, uncompromising (and, of course, total nonsense):

“I have considered your request for a list of names of prospective buyers who have been shown through your house up until and including today. Unfortunately, according to the Company’s Privacy Policy and the Confidentiality rights of those said people, I cannot provide you with any names of any of the prospective buyers. Thank you for your understanding in this matter. Kindest Regards…”

When my clients revisited the documents they’d initialed on listing their property, they discovered this agent-friendly legalistic REIQ form:

NOTICE OF COLLECTION OF PERSONAL INFORMATION

The Agent will only use personal information collected from the Client, including personal information included in the sale and purchases appointment form, to:

• Act as the Client’s agent and to provide the services contemplated under the appointment agreement;

• Promote services of the Agent to the Client;

• Service and advise other existing and potential clients (by comparing properties);

The Agent may, to the extent necessary to carry out its appointment or as otherwise permitted under the Privacy Act, disclose such information to third parties including potential buyers, newspaper and other media organizations involved in property advertising, persons engaged to evaluate the property, owner’s corporations, government and statutory bodies, and financial institutions.

The Agent may also disclose certain details about the Clients property listing or sale to other existing and potential clients in order to promote and provide its services to those clients.

The Client can gain access to any personal information which the Agent holds about the Client, by contacting the Agent. The Agent’s contact details are provided in the appointment form. The Agent may refuse access to such information in the limited circumstances provided for in the Privacy Act. The Agent may charge the Client a reasonable fee to provide the requested access.

The Agent will take all reasonable steps to correct any information which the Client shows to be inaccurate, incomplete or out-of-date.

Real estate and tax laws require some of the information described in the appointment form to be collected. If certain information is not provided, the Agent may not be able to act effectively on the Clients behalf or act for the Client at all.

Without even checking with me, these not-unintelligent and not-inexperienced property-sellers realized that this document applied only to personal information about themselves and not to details of prospective buyers. So they promptly fired this silver bullet back to the agent:

“We have never had a problem with agents in the past providing a full list of names of potential buyers shown through our property. We are NOT asking for phone numbers or addresses – only their names. Due to your privacy policy we have no idea who you have shown through our house. Therefore if we sold our house at a later date OURSELVES to a person you introduced to our property, how would you be able to make a claim for any potential commission on the basis of having introduced that person in the first instance? You are actually putting yourselves at a disadvantage. Can you please confirm that you will not be making any future claim for any possible commission if we sell ourselves at a later date because your current privacy policy dictates that you are unable to provide names of people you introduced to our property? Looking forward to your response, Regards…”

Agents everywhere – whether their engagements have been open, sole or exclusive – have both a legal duty and a fiduciary duty to disclose to their clients, not only full details of all persons introduced to a property, but also all matters disclosed by prospective buyers. In fact Queensland’s statutory Real Estate Agency Code of Conduct provides very specifically for the protection of buyers:

“A real estate agent must warn a customer, as soon as possible, that any information disclosed to the agent may be disclosed to the agent’s client.”

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