The Court of Appeals accepted certification today of a question asked by the U.S. Court of Appeals for the Second Circuit regarding the fiduciary duty of buyer’s agents in real estate transactions – Rivkin v Century 21 Teran Realty LLC, 2007 NY Slip Op 06531. The use of real estate agents by buyers in real estate transactions has become increasing poplar in recent years, yet New York law has not yet decided important aspects of the nature of the relationship between the buyer and the agent. In the case at issue, a buyer was using a real estate agency as a buyer’s agent to look for property to purchase. One of the brokers in the agency located a property for the buyer, and the buyer made a bid. However, unbeknownst to the buyer, at the same time another broker in the same agency was representing another buyer also interested in the same property. This second buyer bid a higher price, and thus, the first buyer was unable to obtain the property. The first buyer claimed that his broker and/or the agency itself, should have disclosed the fact that another broker in the same office was representing another interested buyer for the property. The first buyer claimed that if he had known that the agency was representing another buyer, he would have changed his bidding strategy, or not relied on the advice of his broker in making his bid.
Since the issue of a buyer’s agent’s duty to disclose such competing buyers has not been decided by the N.Y. Courts, the Second Circuit certified the following question to the Court of Appeals:
Did [the defendants] breach a fiduciary duty to [the plaintiff] by failing to disclose, in any form, [defendants’] representation of a competing buyer for the property [plaintiff] sought to buy?
The question will be briefed and argued before the Court of Appeals presumably during this term.