Conflicts of interest as a property broker

Conflicts of interest as a property broker

Commercial Property

2019-06-19

By the very nature of the job as a property broker, there are conflicts of interests that arise during any property transaction. After all, the property broker is a kind of “double agent”: he’s there to ensure the best interests of his client – the tenant – but he also needs to ensure that the other party in the deal – the landlord – is getting a good enough deal in order for it to be successful. While this is not a problem when the deal is going well, if things go south, and the property broker’s interests start conflicting with those of the client or the landlord, it can be problematic. These interests could relate to a personal conflict, financial standings, shareholdings or a role in the company looking for commercial space or within the company leasing it. There may also be direct interests, where the agent is offered a direct benefit (whether financial or otherwise) to have a deal sway a particular way. As an illustration, here are some examples where a conflict of interest may arise between the property broker and the client or landlord: Direct conflicts of interest
  • The broker personally buys, leases or takes an option on a commercial property that they are advertising to let or sell
  • The broker receives monetary bonuses, shares, holidays, discounts or dividends from a company that the broker recommends to his clients
Indirect conflicts of interest
  • The broker helps an employee, friend or business associate to take an interest in a particular property they are listing
  • The broker recommends a service provider to a client that is affiliated in some way with the broker’s relative, friend, or business associate
According to guidelines set out by the Royal Institute of Chartered Surveyors (RICS), the most important reason to avoid a conflict of interest is to prevent anything affecting your duty advise and represent each client objectively and independently, so that the client (and the public) can be confident you’re doing so without your own personal interests affecting your judgement. RICS Rules of Conduct set an overarching obligation on both members and RICS regulated firms at all times to “…act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with its professional obligations.” So, if there is a potential conflict of interest with a property agent, whether directly or indirectly, there are several things they should do. Disclosure If there is a potential conflict of interest, it is always ethical for the broker to disclose their affiliations to both the client and the landlord.

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