Seller's agent shared buyer's inspection report without consent

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Seller's agent shared buyer's inspection report without consent

Tara Piantanida-Kelly
Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes

We are the buyers in a 4-property multi-family deal.  The property inspector we usually use wasn't available. The seller's agent/listing agent recommended someone she's used before, and we agreed to hire him for the job. He requested/demanded full payment ($1,500) before the reports were delivered. We complied (that's on us) and paid him $1,500 on Monday, October 26. He delivered four reports on Monday, October 26 - to the seller's agent. By Wednesday, we still hadn't seen any reports, so we asked about them. The seller's agent then forwarded the reports to me on Wednesday afternoon. The email she forwarded to me shows that she sent the reports to her client, the seller, as soon as she received them on Monday. 

She shouldn't have received the reports at all, and we called the property inspector about it. The property inspector said something about thinking that the seller's agent was representing us, and he apologized. On a scale of inappropriate to unethical to illegal, 1) where does the property inspector fall on sending the reports to the seller's agent and 2) where does the seller's agent fall on sharing our inspection reports with her client without our consent? 

I really just want to know what kind of leverage it gives us in renegotiating the deal. (The inspection reports showed some things that need addressing immediately.)  What would you do? Seller's concessions? Ask the seller to cover the cost of the four appraisals (about $1400) to compensate? I'd love to hear your thoughts. 

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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y

Hi @Tara Piantanida-Kelly, I'm sorry to hear about your frustrating surprise here!

The fact that the seller obtained it from the inspector seems like the piece of the puzzle that is most regrettable here.  Depending on your state's specific real estate contract the inspection report may be required or expected to be provided to the seller, as it is in my state (though this is a little known fact).  

I personally wouldn't push on it at all, but would speak again with the inspector and emphasize how inappropriate that was. 

I personally provide the inspection report to the listing agent and seller every time so that they can understand how reasonable I'm being by not asking them to fix all of the things that need to be repaired on the home.  Perhaps them having a few extra days to stew on the report will work out to your benefit in the end.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y
    Originally posted by @Steve Morris:
    Originally posted by @Russell Brazil:
    Originally posted by @Steve Morris:

    An agent has a duty of confidentiality to their client only. They do not have that duty to non-clients.

    Again, I think that statement is also way off.  We have higher loyalty to our principal.  However, what your saying is if a seller tells me somethingin confidence I can tell it to any potential buyer I represent?  So if he tells me, I've listed at $100K, but from your client I'll take $90K?

    Did you read the post? 

    Seller's agent shared buyer's inspection report without consent

    They dont need the buyers consent. They have no duty of confidentiality to the buyer. They do have a legal fiduciary duty to the seller who is their client, which means they are required by law to share any information about the property with the seller. 

    Your suggestion that they not share the information with the client is illegal and a breaking of their duties as a fiduciary. 

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  • Aaron Gordy
    Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes
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    I concur with @Russell Brazil the listing agent has a fiduciary duty to his/her client only. That is it. It seems like an honest mistake. It really should work out to your advantage. In the Austin market, the listing agents do not want to know what is on the inspection report. The reason is that if the buyers pull out during the option period then the sellers will have to disclose the inspection report/issues to future buyers. That is a huge handicap with future negotiations. Usually that equates to thousands of dollars in discounts and sometimes 10's of thousands. Not good.  

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
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    Your suggestion that they not share the information with the client is illegal and a breaking of their duties as a fiduciary.

    OK, let me ask this more generically, if a seller's agent got hold of something they did not expressly have the right to have access to (ie the inspection report), then it's ethically OK (or as you imply, necessary) to share it with anyone they want just because of possession?

    It's not the inspection report, which is a nit, it's more about honoring confidentiality to all parties as a default provision.

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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y
    Originally posted by @Steve Morris:

    Your suggestion that they not share the information with the client is illegal and a breaking of their duties as a fiduciary.

    OK, let me ask this more generically, if a seller's agent got hold of something they did not expressly have the right to have access to (ie the inspection report), then it's ethically OK (or as you imply, necessary) to share it with anyone they want just because of possession?

    It's not the inspection report, which is a nit, it's more about honoring confidentiality to all parties as a default provision.

     There is no duty of confidentiality to individuals that are not their clients. There is only a duty of confidentiality to their clients. 

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
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     There is no duty of confidentiality to individuals that are not their clients. There is only a duty of confidentiality to their clients. 

    OK, so in the sense of full disclosure when I talk to people I should say:

    "If you're not my client, anything you tell me in confidence I can share with anyone I d*** well please!"?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y
    Originally posted by @Steve Morris:

     There is no duty of confidentiality to individuals that are not their clients. There is only a duty of confidentiality to their clients. 

    OK, so in the sense of full disclosure when I talk to people I should say:

    "If you're not my client, anything you tell me in confidence I can share with anyone I d*** well please!"?

    Your profile says you are a broker, you should be well versed in fiduciary laws. 

    There is no reason why a complete stranger to you, of whom you have no relationship should expect things they tell you to be confidential. (Except Oklahoma I believe)

    Your duty to the public is singular, and that is to treat the public fairly.  Confidentiality plays no part in your duty to the public.  In fact many states require you to give a form to non-clients/customers stating just that fact to make it crystal clear. 2 of the 6 states Im licensed in require just that. 

    NAR SOP 1-9

    Realtors shall not

    1. 1) reveal confidential information of clients; or
    2. 2) use confidential information of clients to the disadvantage of clients; or
    3. 3) use confidential information of clients for the REALTOR®’s advantage or the advantage of third parties unless:
      • a) clients consent after full disclosure; or
      • b) REALTORS® are required by court order; or
      • c) it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or
      • d) it is necessary to defend a REALTOR® or the REALTOR®’s employees or associates against an accusation of wrongful conduct.

    Information concerning latent material defects is not considered confidential information under this Code of Ethics. (Adopted 1/93, Amended 1/01)

     "Clients" are due confidentiality. "Customer" are not. 

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
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    @Tara Piantanida-Kelly

    I'm sorry.  In following this thread I just realized that you are purchasing in a 4 family unit.  So, $1500 inspection isn't bad at all!

    As for leverage on how to go forward..  Normally in my market, the buyer's side provides the report with their repair request.  Of course, if there is no request there is no need to provide the report.  So, while the seller's have a "headsup" on what the report says, they would have seen it anyway since the inspector flagged some conditions for immediate repair.  The inspection report is your "justification/back-up" for the repair request.

    ...  Again, this would be a reason to work with a competent buyer's agent who could help you through the process.

    Good luck.

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Steve Morris

    Maybe my funeral, but I thought I'd give me quick two cents... NAR's Code of Ethics has one overarching rule: honesty. So, yes what you said is correct in so much as its honest. But, why would any non-client expect to be treated as a fiduciary? At least in NJ, we have a form that we are required to give out that basically states the four posssible agencies in NJ. It follows the CoE in that buyer's agents work for buyers, seller's agents work for sellers, etc. If the other side's inspector sends me a report, nothing says I have to turn a blind eye to it. Maybe for professional courtesy sake I would inform the other agent that I received the inspection report, in this case. While nowadays with electronic transmission the reports easily can be sent anywhere and everywhere.

    My understanding of the NAR CoE is that fidiciary responsibility and associated confidentiality is solely focused on your client.

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Russell Brazil:
    Originally posted by @Steve Morris:

    There is no reason why a complete stranger to you, of whom you have no relationship should expect things they tell you to be confidential. (Except Oklahoma I believe)

    Happens a lot with off-market deals (not a client before an accepted offer) or pitching for a listing (not a client until listing is signed.)

    Just think it's foolhardy to share stuff that people tell you in confidence just because they're not a client.  I do respect people, client or no.

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  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    5y

    Why so much whining and victimhood? A shame people aren’t allowed to make honest mistakes anymore. As mentioned a bunch of times above. You would have shared it anyway. In fact in Indianapolis it would have been shared with the sellers without even asking. If you have a repair contingency you want the seller to see the report. Sort of the point of them.

    Honestly what issue is there? How are you negatively affected at all? It actually helps you probably as the sellers had to see it two days before you and were likely sweating it. Call the inspector AGAIN to berate him? Why? Does that help him? That make you feel superior? Stop acting like babies.

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  • Justin R.Pro Member
    Rental Property Investor · San Anselmo · Member since 2015 · 659 posts · 600 votes
    5y

    @Tara Piantanida-Kelly as long as you weren't planning any dirty "re-trading" tactics who cares if they see it. I always share my reports so we are all honest and on the same page.

    This should really be nothing more than slightly annoying to you and quickly forgot about.

    Best of luck with your purchase!

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  • Reinaldo Lopez
    Inspector · Fort Lauderdale · Member since 2019 · 223 posts · 51 votes
    5y

    Hi Tara. You are right the inspector should send the report directly to you and not to any agent regardless his position or relation. Under most state it is a law and under the Nachi or Ashi association it is a violation of ethics. the report belongs to you and the realtor should honor that it is not for share, you pay for it. If you need more info you can send me a personal msg and I can explain in details. You can check his name on this sites Nachi.org or Ashi and read about the Inspector rules and ethics.

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  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y

      it appears the original poster has left the building. 

    I will add just a tiny bit of insight that I didn’t see someone else mentioned yet. Where as you used the inspector that the listing agent recommended it is highly probable that the inspector thought that you and the listing agent were working together. Whereas the original poster has not returned to the site it’s probably not a big deal and everybody was happy to reply on something so simple. :-)

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  • Cara Lonsdale
    Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
    5y
    Inspections are required to be provided to the Seller in AZ (my market).  My guess is that it is similar in most other states.  The fact is the Seller should have a right to view any inspection results that are completed on their property.

    It is unfortunate that the inspector didn't confirm who his client was, and didn't send a copy of the report to the party who paid for it first.  However, I can see how it happened if this inspector works frequently with this agent, and she referred you to them.  His assumption that you were her client doesn't seem malicious.  

    But I understand how it might feel.  It is understandable that you are upset.
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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    No, Joe S. I'm still here. I haven't "left the building". I've just been busy negotiating this deal. We use real estate attorneys here in NY, and mine confirmed that the seller's agent sharing our inspection report with her client without our consent was unethical. 

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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    Thanks, @Steve Morris. I agree.  The listing agent received it by mistake (the property inspector's error), and forwarded it to her client, the seller. In the listing agent's email to her client, she said "The buyers haven't seen it yet."  Clearly, she knew that she wasn't supposed to do that.  

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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    Thanks, @Lydia S. It sounds like several people replying to this post assume that these things (sharing inspection reports) are handled the same way everywhere. You and I know that they aren't. Here in NY, the report belongs to the one who pays for it (i.e the buyers). Other parties can request to see it, but it is up to the owner of the report if they want to share it or not. My beef isn't with the property inspector. I believe he made an honest mistake. I'm not happy about that, but I don't think he was being dishonest. I believe that the listing agent, on the other hand, did not treat me honestly (according to the NAR Code of Ethics). She clearly knew that the report was delivered to her in error and that forwarding it to her client was unethical.

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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    @David M. and @Russell Brazil.  I completely understand that the listing agent has a fiduciary relationship with her client and not with me. The very first paragraph of Article 1 of the National Association of Realtor's 2020 Code of Ethics & Standards of Practice: "When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly."  
    https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/2020-code-of-ethics-standards-of-practice

    I would argue that the listing agent, when she forwarded the reports to her client and said "The buyer's haven't seen this yet.", was not treating me honestly. 

    Russel, you say:

    "Also, you would have ended up sending it to them anyways in your next step of negotiations, so it really looks like you are trying to create a problem where one doesnt really exist." Not necessarily. Here in NY, we are NOT required to share the report with anyone. If we choose to, it is at our discretion. Listing agents here know that.

    '"Clients" are due confidentiality. "Customer" are not.' I agree. The listing agent didn't owe me confidentiality, but she did owe me honesty.

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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    Thank you, @Reinaldo Lopez.  

    0Reply
  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Tara Piantanida-Kelly
    okay.  If you feel strongly about it, then go ahead and file a complaint with the local Board of Realtors. Good luck

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  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Tara Piantanida-Kelly

    Lets assume for a second that, as a point of fact, that the home inspector and listing agent both are wrong. 

    So what?

    What demonstrable damages have you suffered and/or how has the buyer having the report put you at a disadvantage? 

    It hasn't. They own the property.  99% chance, they knew everything that was contained in the report. Sure, now they know you what you know, but when you came back to re trade because XYZ will cost $5k to fix, you'd provide the report to support your negotiation. Structurally nothing has changed. 

     If you could lock the agent up in the stocks for a weekend would that make you feel better or would you rather them ridden out of town on a rail?  Seems like you have somehow taken this personally and that's your prerogative. However, it does lower the chances of closing the deal. 

    So then, are you willing to lose the deal and all the profits it potentially came with over these transgressions? 

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  • Tara Piantanida-Kelly
    OP
    Investor · Caledonia, NY · Member since 2013 · 114 posts · 41 votes
    5y

    @Bill F.  Here's my concern: I've stayed in the deal and am now working with someone who has shown me that they are unethical and/or can't be trusted. I don't want to punish anyone. But she's broken trust. I'm just wondering what other things she may do between now and when (if?) the deal closes. 

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  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    5y
    Originally posted by @Tara Piantanida-Kelly:

    @Bill F.  Here's my concern: I've stayed in the deal and am now working with someone who has shown me that they are unethical and/or can't be trusted. I don't want to punish anyone. But she's broken trust. I'm just wondering what other things she may do between now and when (if?) the deal closes. 

     If this act has broken your trust then you should walk. Warren Buffet says you should only do business with people you "like, respect, and admire". Life is too short to deal with people you do't like. 

    Since you have stayed in the deal you revealed a preference that this transgression's cost isn't as great as the perceived benefit from the purchase of the asset. 

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Bill F.:

    @Tara Piantanida-Kelly

    What demonstrable damages have you suffered and/or how has the buyer having the report put you at a disadvantage? 

    Great logic - I lied on behalf of my client and didn't get caught and we both got what we wanted = Zero disadvantage.

    If your standard practice is to tell every/anyone anything you get told by non-clients in confidence, don't expect much of a rep.

    In short, why would I trust you with info that isn't public?

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  • Harry Stoud
    Member since 2021 · 2 posts · 0 votes
    5y

    As a licensed home inspector and a real estate investor, I am surprised at some of these responses, fiduciary this and fiduciary that. I would take little advice from those on here who are realtors. Real estate professionals and home inspectors are bound by sperate and sometimes very different laws and regulations.

    Your local laws do come into play, but I don't know of any state that takes away the buyer's ownership of the report. Let's be clear here, the report is the property of the person who paid for it, period. 

    Now, I do agree with the seller's agent rights to share the report with their client. However, there is a proper chain of custody concerning the delivery of the reports. The buyer pays for the report, inspector delivers report to the buyer/client (and buyer's agent if agreed upon), and then the report is delivered to the seller's agent/seller.

    With that being said, it seems your issue is with the home inspector. If the home inspector apologized for the mistake, this clearly shows that the inspector's actions were not proper. 

    The report is your property and your property alone. Most inspectors include a clause in their Pre-Inspection Contract Agreement that clearly outlines that the report is your sole property and that the report can only be shared with your approval etc. I'd review the inspection agreement thoroughly. If the report contained this clause, you may have legal recourse. This would be a clear violation of your contract with the inspector.

    We home inspectors do get busy, mistakes like this can happen. However, I do feel that this type of mistake should be dealt with. I assure you, if the inspector can be held liable, he/she will not make this mistake again.

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