Is it legal for a realtor to call another realtor and tell them that there are deed restrictions on a home they are selling when there’s not?

UPDATED: Oct 1, 2022

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Is it legal for a realtor to call another realtor and tell them that there are deed restrictions on a home they are selling when there’s not?

A realtor in KY called another realtor about a house that he was selling for a
client and tried to say that there were income restrictions on the home since the
current owner had a USDA rural development loan. This information was false, it
this legal for a realtor to do?

Asked on January 11, 2019 under Real Estate Law, Kentucky


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If the information was true, it would have been legal: anyone may disclose any true information they are aware of to any other person, if there is no court order or contract prohibiting disclosure. 
But because it was false and so represented a wrongful intereference in this sale, it 1) would likely be a breach of the realtor's professional ethics (he could be reported to the state RE licensing board); and 2) if the false disclosure caused the seller to lose a sale, the seller could likely sue for "tortious"--or wrongful--"interference with a contract" or "interference with economic advantage," to recover any costs or losses they incurred due to a sale falling through.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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