Home buyers asks agent to withhold a material fact. Buyers & sellers have implied duty of good faith

I’m going to go over a legal Q&A published by the NC Association of Realtors.

It’s a real-life question from a realtor

A home buyer needs to sell their existing home in order to obtain a loan and close. The buyer receives notice that the people who are buying their current home are terminating their offer.

1. The buyer demands that their agent not tell the home seller about the termination.

2. The buyer is considering whether to tell the seller that if the seller does not refund their due diligence fee, they will delay terminating the current transaction all the way through the grace period of the contract.

The guidance from the real estate commission.

1. The buyer's agent must immediately disclose to the seller or listing agent about the termination. There is ample and long-held guidance that either party's inability to complete the transaction is a material fact, and they specifically mention a buyer's inability to qualify for a loan.

Real estate agents are duty-bound to notify the other party of a material fact. Failure to disclose a material fact is the number one reason realtors are disciplined.

2. As for the strategy to obtain a refund of the Due Diligence Fee, the buyer’s agent should advise them to discuss the strategy with legal counsel, who should inform them that every contract in North Carolina has an implied duty of good faith.

North Carolina Courts have “consistently held that [i]t is a basic principle of contract law that a party who enters into an enforceable contract is required to act in good faith and to make reasonable efforts to perform his obligations under the agreement.”

In this situation, it sounds like the buyer may attempt to violate that duty in an attempt to obtain a refund of the Due Diligence Fee.

Assisting your client in this endeavor may expose you to liability and violate both the License Law and the Code of Ethics.