Section R4-28-1101. Duties to Client

A.      A licensee owes a fiduciary duty to the client and shall protect and promote the client’s interests. The licensee shall also deal fairly with all other parties to a transaction.

B.       A licensee participating in a real estate transaction shall dis- close in writing to all other parties any information the licensee possesses that materially or adversely affects the con- sideration to be paid by any party to the transaction, including:

1.        Any information that the seller or lessor is or may be unable to perform;

2.        Any information that the buyer or lessee is, or may be, unable to perform;

3.        Any material defect existing in the property being trans- ferred; and

4.        The existence of a lien or encumbrance on the property being transferred.

C.      A licensee shall expeditiously perform all acts required by the holding of a license. A licensee shall not delay performance, either intentionally or through neglect.

D.      A licensee shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the initiation, processing, or finalizing of a transaction on behalf of a client. This prohi- bition does not obligate a licensee to agree to alter the terms of any employment or compensation agreement or to relinquish the right to maintain an action to resolve a controversy.

E.       A real estate salesperson or broker shall not act directly or indirectly in a transaction without informing the other parties in the transaction, in writing and before the parties enter any binding agreement, of a present or prospective interest or con- flict in the transaction, including that the:

1.        Salesperson or broker has a license and is acting as a prin- cipal;

2.        Purchaser or seller is a member of the salesperson’s, bro- ker’s, or designated broker’s immediate family;

3.        Purchaser or seller is the salesperson’s or broker’s employing broker, or owns or is employed by the sales- person’s or broker’s employing broker; or

4.        Salesperson or broker, or a member of the salesperson’s or broker’s immediate family, has a financial interest in the transaction other than the salesperson’s or broker’s receipt of compensation for the real estate services.

F.       A salesperson or broker shall not accept compensation from or represent more than one party to a transaction without the prior written consent of all parties.

G.      A salesperson or broker shall not accept any compensation, including rebate or other consideration, directly or indirectly, for any goods or services provided to a person if the goods or services are related to or result from a real estate transaction, without that person’s prior written acknowledgement of the compensation. This prohibition does not apply to compensa- tion paid to a broker by a broker who represents a party in the transaction.

H.      The services that a salesperson or broker provides to a client or a customer shall conform to the standards of practice and com- petence recognized in the professional community for the spe- cific real estate discipline in which the salesperson or broker engages. A salesperson or broker shall not undertake to pro- vide professional services concerning a type of property or ser- vice that is outside the salesperson’s or broker’s field of competence without engaging the assistance of a person who is competent to provide those services, unless the salesper- son’s or broker’s lack of expertise is first disclosed to the client

in writing and the client subsequently employs the salesperson or broker.

I.        A salesperson or broker shall exercise reasonable care in ensuring that the salesperson or broker obtains information material to a client’s interests and relevant to the contemplated transaction and accurately communicates the information to the client. A salesperson or broker is not required to have expertise in subject areas other than those required to obtain the salesperson’s or broker’s license. A salesperson or broker shall take reasonable steps to assist a client in confirming the accuracy of information relevant to the transaction.

J.        A salesperson or broker shall not:

1.        Permit or facilitate occupancy in a person’s real property by a third party without prior written authorization from the person; or

2.        Deliver possession prior to closing unless expressly instructed to do so by the owner of the property or prop- erty interest being transferred.

K.      A salesperson or broker shall recommend to a client that the client seek appropriate counsel from insurance, legal, tax, and accounting professionals regarding the risks of pre-possession or post-possession of a property.

Historical Note

Adopted effective May 1, 1980 (Supp. 80-3). Former Section R4-28-27 renumbered without change as Section R4-28-1101 (Supp. 87-1). Section R4-28-1101 amended by final rulemaking at 5 A.A.R. 650, effective February 3, 1999 (Supp. 99-1). Amended by final rulemaking at 8

A.A.R. 3640, effective August 6, 2002 (Supp. 02-3). Amended by final rulemaking at 11 A.A.R. 506, effective

March 5, 2005 (Supp. 05-1).