Underwood and a partner purchased the property. Explain what rights, if any, Demming has against Underwood.


Underwood and a partner purchased the property. Explain what rights, if any, Demming has against Underwood.


Sheree Demming—a real estate investor in the business of acquiring properties in the Bloomington, Indiana area for remodeling, renovation, leasing, and sale—engaged Cheryl Underwood’s professional services as a realtor to buy and sell properties on multiple occasions between July 2012 and April 2017. In 2012, Demming became particularly interested in purchasing two properties owned by Marion and Frances Morris and managed by realtor Julie Costley. The properties, however, were not listed for sale. Underwood made an offer to Costley on Demming’s behalf in the fall of 2012. After the offer was rejected, Underwood approached Costley every few months to inquire whether the properties were available for purchase. However, unknown to Demming, Underwood became interested in purchasing the properties for herself after she acquired a neighboring property in May 2016. In February 2017, Demming again instructed Underwood to inquire into the availability of the properties. Accordingly, Underwood asked Costley to contact Mrs. Morris, whose husband had recently died. Costley agreed to contact Mrs. Morris but expressed doubt as to Mrs. Morris’s willingness to sell. The next day, Underwood told Demming that the properties were not for sale. A few days later, Costley contacted Mrs. Morris, who instructed Costley to request that anyone interested in purchasing the properties tender a written offer. When Costley informed Underwood that Mrs. Morris was willing to entertain an offer, Underwood did not relay this information to Demming. Instead, on March 30, 2017, Underwood and a partner purchased the property. Explain what rights, if any, Demming has against Underwood.

Explanation & AnswerSolution by a verified expert

Verified Answer

In this case, agency relationship between Individual D and Individual U exists as matter of fact that states that the Individual U has not fulfilled its Fiduciary Duty.
Fiduciary duty arises out of trust and good faith between the parties of agency relationship. Fiduciary duty obligates the agent to provide all relevant, material information to the principal, act in good faith, and deal fairly with the principal.
Individual U has broken that trust by providing inaccurate and misleading information regarding the property that Individual D wanted to purchase.

At the time when Person C informed Individual U that Individual M wants to sell the property, Individual U was still the agent of Individual D and should have provided that information to Individual D. However, Individual U kept this as a secret.
Individual U's claim that the agency relationship obligates it to only enquire about the property cannot be considered true as it can easily be understood that Individual D wants to purchase the property. This is because Individual D  asked Individual U to keep track of the same property for over 4 years.

Individual D can exercise its right of breach of agency relationship by Individual U on the basis of the above facts.

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