By T.W. Shortt, CRB®, CRS®, Principal Broker, REALTY WORLD® Knox Realty Group, LLC — The Fort Knox Office™
You hire a real estate agent to sell your property. Later, that agent becomes the buyer—or offers to sell you a property they own.
What happens to the relationship of trust? Who represents your interests? What responsibility does the principal broker have?
After forty years in real estate, these questions have a particular meaning for me. My own brokerage encountered a somewhat similar legal dispute nearly thirty years ago.
A new Kentucky decision brings the issue back into focus.
In Wagner v. Lenihan Real Estate and Rick Walters, decided November 13, 2026, a homeowner hired Walters to sell his home, then purchased a property Walters owned. Wagner alleges unclear ownership disclosure and an additional $85,000 demand beyond the written $300,000 purchase price. Walters disputes that account, maintaining the agreed price was $385,000.
The brokerage argued that Walters sold the property privately. The Court of Appeals revived most claims against both defendants, finding sufficient allegations or unresolved factual questions for further proceedings. Liability remains unresolved. Read the opinion.
A case from my own experience
In 1996, an agent affiliated with my then-brokerage, T.W. Shortt Better Homes & Gardens, listed an Elizabethtown restaurant for sale. During the listing period, the agent agreed to buy the business himself through seller financing.
Neither the agent nor my firm received a commission. The agent subsequently defaulted, and the seller sued both of us.
The resulting civil trial produced a fraud verdict against the agent and a comparative negligence verdict against me concerning supervision. That experience is part of my professional history, and it deserves a straightforward account.
A separate dispute reached the Kentucky Court of Appeals as Kentucky Real Estate Commission v. Cook, decided July 11, 2003. It concerned whether the seller could recover from the commission’s Recovery Fund.
The appellate majority upheld KREC’s determination that the agent had acted as an individual purchaser in that transaction, making the loss ineligible for Recovery Fund payment. That decision addressed fund eligibility. It did not overturn the separate civil verdict against me.
A dissenting judge believed the seller continued relying on the trust established when the relationship began as an agency relationship.
What these cases mean for brokers and consumers
The cases involved different transactions and legal questions. Both opinions were unpublished and carry no binding precedential weight. Nevertheless, they illustrate how difficult it can be to determine where professional representation ends, and personal dealing begins.
My practical recommendation is to address that question before negotiations advance. Identify ownership interests in writing. Explain each person’s role. Encourage independent representation and legal advice. Document price changes and separate payments.
Principal brokers should review these arrangements early, particularly when an agent is dealing personally with an existing client.
Forty years in business includes lessons learned through difficult experience. One I would pass along is this—when an agent becomes the other party, everyone needs a clear understanding of whose interests that agent represents.
This article provides general information and does not constitute legal advice. The author is a Kentucky real estate broker, not an attorney. Seek advice from a Kentucky real estate attorney about your specific transaction
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