The duty of confidentiality in the real estate

In any registration agreement, the attorney relationship ends at a particular point in time.

A sales contract, as we know, is nothing more than a contract between the legitimate owner of an interest in land (the "principal") and a duly authorized real estate company (the "agent"), by which the company stipulates and agrees to find, within the time limits, a buyer who is ready, willing and able to acquire the interest in the land subject to the contract while acting within the limits of the authority that the donor of order confers on the agent, and in which the title holder stipulates and agrees to pay a commission if the licensee manages to find that buyer.

As in all contracts, a quotation agreement implicitly implies an element generally recognized in law as an "implicit commitment in good faith and loyal relationships". This clause is a general assumption of the law that the parties to the contract – in this case, the title holder and the licensed real estate company – will treat each other fairly and will not be subject to damages by breaking their words. . or otherwise violate their respective contractual and mutual obligations, express and implied. A breach of this implied term engages liability in both contract law and in tort.

Because of the special nature of a registration agreement, the courts have long held that, during the term of the agency relationship, the contract involved a second element arising from the many duties and responsibilities of the agent to the principal. : a duty of confidentiality, which requires an agent acting exclusively for a seller or a buyer, or a dual agent acting for both parties under the terms of a dual agency contract limited, to keep confidential certain information provided by the donor. As with the implicit undertaking of good faith and fair dealing, a breach of this duty of confidentiality incurs its liability in both contract law and in tort.

Following a recent decision of the Real Estate Council of British Columbia (, as the regulatory body is mandated to protect the public interest in real estate matters, the question arises as to whether the duty of confidentiality applies beyond the expiry or termination of the contract of sale.

In a recent case, the Real Estate Council has reprimanded two licensees and a real estate company for breach of a duty of continued confidentiality, which, according to the Real Estate Council, was due to the seller of a property. In this case, the property in question has been registered for sale for more than two years. During the term of the registration agreement, the price of the property was reduced twice. Nevertheless, the property was ultimately not sold and the list has expired.

After the expiry of the list, the seller has entered into three separate "commission agreements" with the real estate company. On all three occasions, the seller refused to use an agency and the company was identified as a "buyer agent" in these compensation arrangements. A party has filed a lawsuit against the seller for the property in question.

The attorney representing the plaintiff went to the real estate company and asked him to provide affidavits containing information on the property list. This lawyer made it very clear that if the firm did not voluntarily provide the affidavits, he would assign the firm and the licensees to testify in order to testify before the judge, or obtain an order of the court under the Court rules require the company to provide such evidence. Believing that there was no other choice in the matter, the real estate company quickly complied with the required affidavits.

As a direct and immediate consequence, the seller filed a complaint with the Real Estate Board stating that the information contained in the affidavits was "confidential" and that the company had breached an obligation of confidentiality towards the seller. It turned out that the affidavits were never used in court proceedings.

The real estate broker, for his part, has adopted the following position: any obligation of confidentiality resulting from the agent&39;s relationship ends when the sales contract expires. The company further argued that even if there was an obligation of continuing confidentiality, this obligation would not prevent or otherwise limit the evidence that the real estate broker would be compelled to give under a subpoena or as part of a procedure under the law. Court rules. Finally, the real estate company pointed out that there was no real estate agent-client privilege and that in this case the Seller could not have prevented the firm from providing evidence in the suit.

The Real Estate Board did not accept the line of defense and maintained that there was a continuing duty of confidentiality that expands after the expiry of the sales contract. The board held that by providing the affidavits, the brokerage and the two licensees had breached this requirement.

The solicitor-client privilege is a legal concept that protects communications between a client and his or her lawyer and maintains the confidentiality of such communications. The solicitor-client privilege is limited, such as the fact that the privilege protects the confidential communication but not the underlying information. For example, if a customer has previously disclosed confidential information to a third party who is not a lawyer, then gives the same information to a lawyer, the solicitor-client privilege will always protect the communication addressed to him, but will not protect the information provided to the third party.

For this reason, an analogy can be established in the case of a real estate agent-client privilege during the existence of a registration agreement, whereby confidential information is disclosed to a third party. party such as a real estate board for the purpose of publication under the terms of a multiple offer. Service contract, but not before this information is disclosed to the real estate broker. In that case, the privilege would theoretically protect the confidential communication as well as the underlying information.

And as to whether the duty of confidentiality goes beyond the termination of a registration contract is still open to debate, again, in the case of solicitor-client privilege, there is a sufficient legal authority to support the position that such a privilege the facts extend indefinitely, so that an analogy can also be inferred regarding the duration of the duty of confidentiality that the agent owes to the seller , to the extent that this obligation extends indefinitely.

In summary, this appears to be the position taken by the BC Real Estate Board in this case.

Clearly, the fact that the duty of confidentiality resulting from a registration agreement persists after the termination of the contract is problematic for the real estate profession in terms of practical applications. If, for example, a registration to broker A expires and the seller is re-registered to broker B, there is a confidentiality obligation incumbent on broker A, in the absence of the seller&39;s express consent, an agent Brokerage A could not act as the buyer&39;s agent for the purchase of the seller&39;s property, if it was re-registered by Brokerage B. All these conditions would therefore be contrary to all the rules of the cooperation between real estate. companies and their representatives. In fact, this process could potentially destabilize the entire base of the multiple listing service system.

In the absence of specific guidelines, until this whole matter is cleared up, the best possible remedy for real estate companies and licensees when a lawyer asks him to provide confidential information is to answer that the brokerage seek the necessary consent. of the client and, if this consent is not obtained, that the lawyer must take the necessary legal measures to compel the disclosure of this information.