ORS 696.805 lays out the duties of a Seller Agent, and ORS 696.810 lays out the duties of a Buyer Agent. In both laws, subsection (3) lays out the things that the agent affirmatively owes just to their client, and (3)(f) requires the agent to maintain confidential information from or about the client except under subpoena or court order, even after termination of the agency relationship. It’s the only obligation that expressly survives termination of agency, which creates a curious lingering tail of representation. At the same time, under both ORS 696.805(2)(c) and ORS 696.810(2)(c), the agent has an affirmative duty to both their client and the opposite party to “disclose material facts known by the agent and not apparent or readily ascertainable to a party.”
Word problem time with a hypothetical:
You represent a Seller, you work with them for a few months, but they keep asking you to keep information about the property private. “Don’t tell anyone that the neighbor next door is a police officer,” “I really want to sell this house fast because I have a business opportunity in Florida that will only be open for a few months and I need to sell this house to finance that opportunity,” and “we need a fast sale so don’t tell anyone that the house floods every spring whenever we get a good rain.” Eventually, you and the client part amicably, with the house unsold. The seller proceeds to market the property as “for sale by owner,” and your next client, a Buyer, finds the house and wants to purchase it. What can/should you tell your buyer client?
- Tell the Buyer everything, you work for the Buyer now — police-neighbor, seller’s rush sale reason, and regular flooding.
- Tell the Buyer nothing; you have a duty to retain the Seller’s confidence even after the agency ends.
- Tell the Buyer only the things that are material about the property – seasonal flooding.
- Tell the Buyer about things that may impact the transaction and property negotiations – rush sale and regular flooding.
- Tell the Buyer about the police officer neighbor if they are curious about the neighbor’s occupation, tell them about the seasonal flooding because it materially impacts the property, but don’t share the seller’s rush sale reason because that’s the seller’s private information.
The correct answer is most likely C, even though it may feel like E is correct too. Under ORS 696.800(3), confidential information means “information communicated to an agent by the buyer or seller of one to four residential units regarding the real property transaction,” but material facts are not considered confidential.
The flooding seasonally? Clearly material and will make or break a transaction, would not be considered confidential, and must be shared with the Buyer.
The information about the Seller’s reason for a rush sale? Strictly confidential information that is not material to the Buyer, but directly pertains to the Seller’s motivation to sell.
The police officer neighbor? For some buyers it could be a material factor, if they are truly opposed to officers of the law and make that clear, then it becomes a material factor that cannot be kept confidential without risking fraudulent representation [e.g. Buyer says “I have had run-ins with the law before and would NEVER intentionally purchase a home next to a cop,” and that statement would arguably render the neighbor’s occupation a material fact if known]. Even though the Seller expressly requested the neighbor’s job be kept confidential, the Buyer’s expressed material concern renders the item non-confidential [a less absurd example could be “I don’t want to live next to someone with dogs because I’m deathly allergic,” when you know the neighbor has dogs, even if the seller, out of fear that the large dogs next door will scare off buyers, demands the fact of the dogs be kept confidential]. For the average, run-of-the-mill Buyer, though, nothing inherently renders the neighbor’s job material to the transaction, and therefore, the Seller’s demand for that information to be kept strictly confidential should be respected, even after termination of agency.