The problem of “non-credentialed interlopers” is growing. I am talking about folks who advertise properties for sale, especially apartment buildings, and when I request the operating data, rent rolls, debt structure, etc., they send what they call a “confidentiality agreement” (CA). Then I read the CA to learn that it is actually a “non-circumvention non-disclosure agreement” (NCND) that prohibits me from speaking directly to anyone that was introduced to me by the other party without first paying a “consulting fee”.

The other party does not own the property, does not have the property under contract, and is not a licensed professional with a contractual relationship with the property owner. They are simply trying to insert themselves into the transaction between the buyer and the seller for a hefty fee, with no legal credentials. They are non-credentialed interlopers.

This behavior is unethical at best and criminally fraudulent at worst. In the United States, anyone purporting to represent the interests of a buyer or tenant, or a seller or landlord, must operate with a real estate broker license with a contractual relationship to the principal, or must be a principal party to the prospective transaction, either by having a legally binding contract on the property or having a limited power of attorney to legally bind the principal to a contract.

This problem happens quite often with “public access” advertising websites. They troll through the advertisements (usually expired or withdrawn), then re-advertise the property as if they were a listing broker or the actual owner. When they receive an inquiry, then they send the NCND hoping that it will be signed blindly, thus binding the party to pay a “consulting fee” for any and all transactions that happen with the real owner or listing broker. There is no contract with the principal or the broker.

They usually claim to be a “financial advisor” or “working with the ownership group” or “I have off-market deals“. What the heck does that mean? Are you contractually related to the owner or not? Show me your credentials!

Clarification: I have no problem working with a Joint Venture Broker who clearly states upfront that he wants to find deals on my behalf (this is similar to a “birddog”), and he will fully disclose to both sides that he is receiving compensation from both sides. The JV Broker must add value to both sides of the transaction by introducing the parties who could not have found each other in a reasonable amount of time without his assistance. 

If you encounter such an interloper, I suggest that you obtain as much identifying information as possible, and then make a complaint with the Secretary of State’s Department of Regulatory Agencies (DORA) for the state in which the property is situated. DORA can investigate the situation and take appropriate legal action as deemed necessary.

My typical response to interlopers is:

I only work with principal parties to the transaction or their legally credentialed representatives, such as attorney-in-fact (i.e., “power of attorney”), attorney at law, licensed real estate broker, or certified public accountant. As you appear to have no credentials to represent or bind the principal party and you are not a principal party to the prospective transaction, I’ve decided to pass on this opportunity.

If I can find the actual owner or listing broker, then I will send an email to them about the interloper so they are aware of the situation and they can take action.

Whenever you receive a purported “Confidentiality Agreement”, be sure to read carefully every word to be sure you are not signing away your rights. Forewarned is forearmed.