Duties to non-client third parties: honesty and material facts

Duties reach beyond the client

A California seller's agent owes fiduciary loyalty to the seller, but also owes duties to the buyer. A buyer's agent similarly owes duties to a nonclient seller. Civil Code section 2079.16 identifies reasonable skill and care, honest and fair dealing and good faith, and disclosure of known facts materially affecting value or desirability that are not known to, or within the diligent attention and observation of, the parties.

Material facts versus confidences

A concealed recurring leak known to the listing agent must be disclosed to an unaware buyer. A seller's instruction to keep it secret does not excuse silence. Materiality concerns a fact's importance to the property decision. Required disclosure does not itself create buyer representation.

Confidential bargaining information that does not involve an affirmative duty need not be volunteered. A seller's private negotiating limit differs from concealed water damage. In California dual agency, protected bargaining information requires the respective party's express permission before disclosure.

Honesty includes conduct and omissions

Silence can breach a disclosure duty. Do not present an unsupported assurance as verified fact. California permits discipline for substantial misrepresentations and influential false promises under Business and Professions Code section 10176, and negligence or dishonest dealing under section 10177. A buyer's reasonable-care responsibility does not erase an agent's duties.

Special treatment of deaths

Under California Civil Code section 1710.2, an occupant's death more than three years before the transferee's offer does not require affirmative disclosure under that rule. HIV status and death from AIDS-related complications are not material facts requiring disclosure. However, this rule does not immunize an intentional lie in response to a direct inquiry about deaths or remove duties concerning the premises' physical condition.

Identify the client, distinguish material property facts from bargaining confidences, and fulfill the duties owed to both parties.