We will continue to post “You Be The Judge”. Thanks.

Here’s the first one: The Case of the Noisy Neighbor:
http://tinyurl.com/33o5us

This is a fascinating case. Given the fact that the brokerage has the agency relationship with the client, couldn’t this finding apply when two agents from the same brokerage are representing different buyers on the same property? This likely happens regularly, especially in hot markets.

Would appropriate wording in a buyer brokerage agreement be sufficient to cover such conflicts? Perhaps another good argument for using bb agreements on a regular basis. Nothing settles disputes more effectively than a written agreement that spells out the ground rules.

I’d love to see more of these posts. They are great learning tools.

It would be wise to find out what your state law says and act accordingly. And make sure your buyer contracts reflect the law.

Contractual waiver of the law may not be enough to save you a lawsuit.

So basically is the only way to deal with this situation is to refer the client to a different agent. If that is true that is somewhat difficult. Agents work hard to get buyers and it would be unfortunate to have to refer them out in this case.

It seems this would happen more frequently in small towns where there are fewer houses on the market.

Amy won. The salesperson, and hence the broker, was liable for breach of their fiduciary duty to Amy.

The case is Zuazua v. Tibbles, decided by the Montana Supreme Court in October 2006.

Th Court held that while the Montana code did not prohibit salespersons from representing multiple buyers, by virtue of the language requiring buyers representatives to act “solely in the interests of the buyer”, the salesperson could not represent 2 buyers competing for the same property. It is an inherent conflict of interests. To do so is a breach of fiduciary duty.
Note: There was no indication by the Court whether the law could be waived by contract implying that the buyer agreements were silent on the point.

The case was a close one. It was decided 4 to 3.
The dissent, written by Justice Rice, argued, in part, that the agent could submit multiple offers from different buyers but could not disclose confidential information, i.e the competing bid/terms, and therefore, would not pit one buyer against the other to drive up the price (& the resulting commission).

So,in Montana, an agent can represent many buyers and show them all the same houses BUT when it comes to making an offer, the first buyer to do so will preclude the salesperson from submitting offers on that property from other represented buyers. You might want to tell your clients this from the gitgo and include language in your buyer agreement.

Read the decision here: http://tinyurl.com/2zyb9k

You can hear the actual legal arguments and court questions here:
http://audiovideo1.law.umt.edu:8080/Zuazua v Tibbles 10-4-06

Yes, I wrote this one (I’m the lawyer in the group)
–jf

I thought Joe wrote this one. I agree that Rudy can cajole just abouot anyone…including Swann. Joe doesn’t have a chance in hell.

I re-read the post. I says they both signed “Agency Disclosure Forms” not “Buyer Agency Agreements”. I agree that most Buyer Broker Agreements would make the case go as you say. But would you change your opinion if they did not sign Buyer Broker Agreements?

I re-read the post and it seems they are going by Agency Law alone and not a Buyer Broker Agreement signed by either buyer.