Duties to customers and third parties: honesty, disclosure, and misrepresentation

Representation and honest treatment

An agent owes loyalty and advocacy to the client, but owes honest, fair dealing to customers and third parties. A customer is not represented merely because the agent provides information. Client loyalty does not authorize deception.

Material facts and confidentiality

A material fact matters to a reasonable person's transaction decision. Known recurring foundation problems are different from a client's private negotiating limit. Disclose known material defects as required; protect legitimate bargaining confidences. A seller's instruction to conceal a serious known defect does not excuse misleading a buyer.

Statements, silence, and care

Misrepresentation by commission involves a false statement. Misrepresentation by omission involves withheld information where disclosure is required, including misleading partial accounts. Claiming a basement never flooded despite known flooding is commission; concealing known recurring flooding while discussing new finishes can be omission.

Subjective praise, such as a beautiful garden, is puffing. A precise acreage claim is a factual representation. Do not guess at facts or disguise measurable claims as opinions. Explain uncertainty and seek an appropriate source. Careless false factual information can raise negligent misrepresentation issues without intentional deception; deliberate deception raises fraud concerns.

Source illustrations

Texas's integrity rule requires prudence and caution to avoid misrepresentation by acts or omissions (22 Tex. Admin. Code § 531.3). Texas requires honest and fair dealing and accurate public information (22 Tex. Admin. Code § 535.156). Texas permits discipline for withholding known significant property defects (Tex. Occ. Code § 1101.652(b)(3)–(4)). Texas's real estate fraud statute addresses material false facts and promises made with an intention not to perform, used to induce and relied on in entering a contract (Tex. Bus. & Com. Code § 27.01).

Specific disclosure exceptions and liability standards depend on applicable law; not every private fact requires disclosure. Ask: Who is represented? Is the information material? What is known? Would the response mislead?