Disclosure of Secured Interest in Listed Property
Article 4, Part 6
Buyer X was interested in purchasing a home listed with REALTOR® B but lacked the down payment. REALTOR® B offered to lend Buyer X money for the down payment in return for Buyer X’s promissory note secured by a mortgage on the property. The purchase transaction was subsequently completed, though REALTOR® B did not record the promissory note or the mortgage instrument.
Following the closing, REALTOR® B recorded both the promissory note and the mortgage instrument. When Purchaser P learned of this, he ﬁled an ethics complaint alleging that REALTOR® B had violated Article 4 by selling property in which she had a secured interest without revealing that interest to the purchaser.
The Hearing Panel agreed with Purchaser P and concluded that REALTOR® B’s interest in the property should have been disclosed to Purchaser P or Purchaser P’s representative in writing.