Concrete Analysis | Estate agents should adopt full disclosure to avoid conflict of interests in property transactions
- Industry’s code of ethics requires full disclosure of personal or pecuniary interests to clients before any transaction
- Non-compliance will result in disciplinary action, including suspension of licence
The real estate market thrives on transparency and trust, and agents must not allow any personal interest to conflict with those of their clients.
Moreover, they should make a full disclosure to their clients of all relevant facts which may amount to any conflict or potential conflict of interests, so as to allow their clients to decide whether to proceed with the proposed transaction or with their appointment as agents.
Generally speaking, an estate agent should not purchase or rent property from a client, sell or let his or her own property to a client unless he or she has made a full disclosure of all the relevant facts. This should be made before entering into any agreement, and having obtained the client’s informed consent to such a transaction.
Under the respective clause of the prescribed Estate Agency Agreements, the person (“Person”) signing the agreement on behalf of the estate agency must disclose whether certain parties have a pecuniary or other beneficial interest in the property concerned.
Such parties include (1) the Person or his nominee; or (2) the Person’s or his nominee’s specified relative (meaning his spouse, parent, child, brother or sister); or (3) the estate agency or any employee, substantial shareholder, partner, or director of the estate agency.
Particulars of such interests (if any) must be specified in Schedule 3 (applicable to Form 3 and Form 5) and Schedule 4 (applicable to Form 4 and Form 6) of the Agreements.
