Common Ethical Breaches

Understanding the NLS Code of Conduct in theory is essential, but recognising ethical breaches in practice is what separates a truly professional agent from one who merely pays lip service to standards. In this lesson, we examine the most common ethical violations encountered in the Spanish real estate market, explain why they occur, analyse their legal implications, and set out how The NLS works to prevent and address them.

Every breach described in this lesson has been observed in the real market. Some are deliberate and calculated. Others result from ignorance, carelessness, or the pressure to close deals in a competitive environment. Regardless of intent, each one damages consumers, undermines professional agents, and erodes trust in the market as a whole.

Ghost Listings and Phantom Listings

What They Are

A ghost listing — sometimes called a phantom listing — is a property advertised for sale that is not genuinely available. The property may have already been sold, withdrawn from the market, never been listed by its owner, or in extreme cases, may not even exist. The advertised price may bear no relation to reality, and the photographs may be of a different property entirely.

Why Agents Do It

The motivation behind ghost listings is almost always lead generation. An agent publishes an attractive listing at a competitive price to generate enquiries from buyers. When the buyer calls, the agent explains that the property is “just sold” or “under offer” and redirects them to other, less attractive properties. The ghost listing served its purpose: it captured a lead.

Some agents maintain dozens of ghost listings across multiple portals, creating the impression of a large, active portfolio while holding few genuine mandates. Others use ghost listings to inflate their apparent market share or to test pricing in a particular area.

Why It Is Harmful

Ghost listings cause real harm to multiple parties:

Buyers waste time, money, and emotional energy pursuing properties that are not available. International buyers may travel to Spain specifically to view an advertised property, only to discover it does not exist.
Sellers suffer because ghost listings distort comparable pricing data. A phantom listing at an artificially low price can make a genuine listing appear overpriced.
Professional agents who maintain accurate, genuine listings are placed at a competitive disadvantage against agents with larger but fictitious portfolios.
The market loses credibility. When buyers learn that a significant proportion of advertised properties are not genuinely available, they lose trust in all listings — including legitimate ones.

Legal Exposure

Ghost listings constitute a misleading commercial practice under the Ley General para la Defensa de los Consumidores y Usuarios (Real Decreto Legislativo 1/2007). Article 5 of the Ley de Competencia Desleal (Ley 3/1991) prohibits acts of deception — conduct that uses false information or that, through its presentation, creates a false impression among recipients, affecting their economic behaviour. Advertising a property that is not genuinely for sale at the advertised price and terms falls squarely within this prohibition.

Under Article 7 of the same law, misleading omissions — failing to disclose that a property is no longer available — are equally prohibited when they cause or are likely to cause the consumer to take a transactional decision they would not otherwise have taken.

Agents who maintain ghost listings face potential civil claims from affected consumers and competitors, administrative sanctions under consumer protection law, and — in serious or systematic cases — criminal prosecution for fraud under the Código Penal.

How The NLS Prevents Ghost Listings

The NLS employs several mechanisms to combat phantom listings:

Mandate verification: Listings require evidence of a valid mandate from the property owner.
Status tracking: Listings must be updated promptly when a property is sold, reserved, or withdrawn. Failure to update triggers automated flags.
Reporting tools: Agents and members of the public can report suspected ghost listings through the platform.
Periodic audits: The NLS Compliance Team conducts periodic reviews of listing accuracy, cross-referencing with land registry data and other sources where possible.

Price Manipulation

Inflating Prices to Win Mandates

One of the most common practices in the Spanish market is price inflation to secure listings. An agent tells the seller their property is worth significantly more than a realistic market valuation, wins the mandate on the basis of the inflated figure, and then spends months gradually reducing the price while the property sits unsold.

This practice is known in the industry as “buying the listing.” The agent knows the inflated price will not attract buyers, but they also know that once they have the mandate — particularly an exclusive mandate — the seller is locked in. After several months of no viewings and no offers, the agent recommends a price reduction, often arriving eventually at the figure a more honest agent would have suggested from the beginning.

The harm to the seller is significant. Properties that sit on the market for extended periods become “stale” — buyers assume there is something wrong with them. The eventual sale price is often lower than it would have been if the property had been correctly priced from the start. The seller has wasted months during which they could have achieved a sale.

Advertising Below Actual Price

The inverse practice — advertising a property below the actual asking price to generate buyer interest — is equally problematic. The agent publishes an attractive headline price, generates enquiries, and then reveals during the first conversation that the actual price is 20% or 30% higher. This bait-and-switch tactic wastes buyers’ time and constitutes a clear misleading commercial practice under consumer protection law.

Legal Implications

Both forms of price manipulation engage the prohibitions in the Ley de Competencia Desleal and the Ley General para la Defensa de los Consumidores y Usuarios. Advertising a property at a price that does not reflect the terms on which the agent is willing (or authorised) to transact is a deceptive practice. Additionally, inflating a valuation to win a mandate may constitute a breach of the agent’s duty of good faith towards their own client under Article 1258 of the Código Civil.

Dual Representation Without Disclosure

The Problem

Dual representation — also called dual agency — occurs when the same agent or agency acts for both the buyer and the seller in the same transaction. This is not inherently illegal in Spain, but it creates an obvious conflict of interest: the seller wants the highest possible price, while the buyer wants the lowest. An agent cannot fully serve both interests simultaneously.

Spanish Law Position

Spanish law does not explicitly prohibit dual agency in real estate transactions. However, the general principles of contract law — particularly the duties of loyalty and good faith under Articles 7 and 1258 of the Código Civil — require that an agent who finds themselves in a position of conflict must disclose this to all parties and obtain their informed consent before proceeding.

The critical word is informed. It is not sufficient to include a generic clause in standard terms and conditions. Both the buyer and the seller must understand, in plain language, that the agent represents both sides, what this means for the service they will receive, and what alternatives are available to them (such as engaging independent representation).

The NLS Approach

The NLS does not prohibit dual representation, recognising that in some markets — particularly smaller or rural areas — it may be practically unavoidable. However, the NLS requires:

Full, written disclosure to both parties before any offer is made or negotiation commenced
Both parties must acknowledge in writing that they understand the dual representation and consent to it
The agent must not use confidential information from one party to the advantage of the other
Where possible, different individuals within the agency should handle the buyer and seller sides of the transaction

Failure to disclose dual representation is treated as a serious breach of the NLS Code of Conduct and will result in disciplinary action.

Commission Disputes and Hidden Fees

The Transparency Problem

Commission structures in Spain vary widely. In some cases, the seller pays the full commission. In others, the buyer pays a separate fee. In some transactions, both parties pay. The amounts range from 3% to 6% or more, depending on the market, the property value, and the agent’s business model.

The ethical issue arises when fees are not transparent. Common problems include:

“No buyer commission” claims: An agent advertises that buyers pay no commission, but the commission is loaded into the sale price, meaning the buyer pays indirectly. While this may be technically accurate (the seller writes the cheque), it is misleading if the buyer believes they are getting a fee-free service.
Last-minute fee surprises: Fees or charges that were not disclosed at the start of the relationship are revealed only at the notary appointment, when the buyer feels committed and pressured to proceed.
Hidden referral fees: The agent receives payments from mortgage brokers, lawyers, or other service providers to whom they refer clients, without disclosing these financial relationships.

Legal Requirements

Under the Ley General para la Defensa de los Consumidores y Usuarios, consumers have the right to be informed about the price of services before they commit. Under Ley 7/1998, sobre Condiciones Generales de la Contratación, standard terms must be transparent, and any term that has not been individually negotiated and that creates a significant imbalance to the detriment of the consumer may be declared void as an abusive term.

The NLS requires that all fees, commissions, and financial interests be disclosed to clients in writing before any engagement begins. This includes:

The agent’s commission rate and who pays it
Any fees charged to the buyer
Any referral fees or commissions received from third parties
Any financial interest the agent has in the transaction beyond their commission

Scraping and Republishing Listings Without Authorisation

The Practice

In a fragmented market with multiple portals and no unified MLS, some agents systematically copy listings from other agents’ websites or portal profiles and republish them as their own. This practice — known as scraping — can involve copying photographs, descriptions, and even floor plans without the listing agent’s knowledge or consent.

Why It Is Wrong

Scraping and republishing listings without authorisation raises multiple legal and ethical issues:

Copyright infringement: Professional property photographs are protected by copyright under the Ley de Propiedad Intelectual (Real Decreto Legislativo 1/1996). Copying and republishing them without permission is a copyright violation. Property descriptions, if they reflect the author’s original creative expression, may also be protected.
Data protection: If the scraped listing contains personal data — such as the owner’s name, address details that identify an individual, or other personal information — copying and processing this data without a lawful basis violates the GDPR/LOPDGDD.
Unfair competition: Passing off another agent’s work as your own to gain competitive advantage is an act of unfair competition under Ley 3/1991. Specifically, Article 11 prohibits the imitation of another’s commercial practices when it causes confusion or constitutes exploitation of another’s reputation.
Misleading consumers: If the buyer contacts the scraping agent believing they hold the mandate, they will discover that the agent has no authority to sell the property, no relationship with the owner, and no control over the terms of sale. This wastes the buyer’s time and creates confusion about who is actually authorised to transact.

How The NLS Addresses This

NLS listings are protected by the platform’s terms of use, which prohibit unauthorised reproduction. The NLS also provides tools for agents to report suspected scraping and maintains an active programme to identify and remove scraped content from third-party platforms where possible.

Pressuring Vulnerable Buyers

The Reality in Spain

Spain’s international property market includes a significant population of vulnerable buyers. These include elderly expatriates who may have cognitive decline, buyers with limited understanding of Spanish law and language, people under financial pressure to relocate quickly, and individuals making emotional decisions following life events such as divorce or bereavement.

Unscrupulous agents exploit these vulnerabilities through high-pressure sales tactics: creating artificial urgency (“another buyer is viewing tomorrow”), discouraging the use of independent lawyers, rushing reservation agreements before the buyer has had time to consider, and minimising or dismissing legitimate concerns about legal issues.

Consumer Protection for Vulnerable Persons

The Ley General para la Defensa de los Consumidores y Usuarios provides enhanced protection for vulnerable consumers. A commercial practice that, while not misleading to the average consumer, is likely to materially distort the economic behaviour of a clearly identifiable group of consumers who are particularly vulnerable — due to age, credulity, or circumstances — is assessed from the perspective of the average member of that group.

This means that sales techniques that might be acceptable when dealing with a sophisticated, experienced buyer may constitute an unfair commercial practice when directed at a vulnerable person.

Cooling-Off Periods and Reservation Agreements

Spanish law provides certain protections that agents must respect and communicate honestly:

Off-premises contracts: Under the consumer protection regulations implementing EU Directive 2011/83, consumers who enter into contracts outside the trader’s business premises (which could include contracts signed at property viewings or in a buyer’s home) may have a 14-day withdrawal right.
Reservation agreements (contrato de reserva): While common practice, these must be drafted clearly, specify the terms of any deposit, and explain the consequences of withdrawal by either party. An agent who pressures a buyer into signing a reservation agreement without giving them time to seek legal advice is engaging in an unfair practice.
Deposit protection: The distinction between an arras penitenciales (where the buyer forfeits the deposit if they withdraw, and the seller must return double if they withdraw), arras confirmatorias (which merely confirm the agreement), and arras penales (which establish a penalty) must be explained clearly. Agents who describe all deposits as “non-refundable” without explaining the legal nuances are misleading their clients.

Misrepresenting Legal Status

The Problem

One of the most dangerous ethical breaches in the Spanish market is misrepresenting the legal status of a property. This takes several forms:

Advertising as “ready to move in” when licences are pending: A property requires a cédula de habitabilidad (certificate of habitability) or licencia de primera ocupación (first occupation licence) before it can be legally occupied. Advertising a property as ready for immediate occupation when these documents have not been obtained is misleading and potentially exposes the buyer to significant problems, including inability to connect utilities, register for residency, or obtain a mortgage.
Failing to disclose illegality of extensions or modifications: Many Spanish properties, particularly in rural areas and along the coast, include structures or modifications built without planning permission. An agent who knows or should reasonably know that a swimming pool, extension, or enclosed terrace is illegal and fails to disclose this is committing a serious breach.
Misrepresenting LRAU/urbanistic status: Properties affected by urbanisation plans, reclassification of land, or coastal zone restrictions under the Ley de Costas require special disclosure. Agents who dismiss these issues or present them as “routine” are failing their clients.
Ignoring AFO/DAFO regularisation status: In Andalusia and other regions, processes exist to regularise certain illegal constructions (the Asimilado a Fuera de Ordenación or AFO procedure). Agents must understand and accurately represent where a property stands in this process — not claim that a property “has AFO” when only the application has been submitted.

Cédula de Habitabilidad Requirements

The cédula de habitabilidad is required in several autonomous communities (including Catalonia, the Balearic Islands, and Navarra) as a condition of sale or rental. In other regions, the licencia de primera ocupación or licencia de segunda ocupación serves a similar function. These documents confirm that the property meets minimum habitability standards — adequate sanitation, ventilation, structural integrity, and safety.

An agent who markets a property without disclosing that the required occupancy documentation is absent, expired, or unobtainable due to legal irregularities is exposing the buyer to serious risk. Buyers who purchase without these documents may find themselves unable to connect water or electricity, register with the town hall, or sell the property in the future.

Case Studies

Case Study 1: The Costa Blanca Ghost Portfolio

An agency operating along the Costa Blanca maintained over 200 listings on major portals. An investigation revealed that fewer than 40 of these properties were genuinely available for sale. The remainder included properties sold months earlier, properties listed without the owner’s knowledge (scraped from other agents), and properties with fabricated details and stock photographs. The agency used this inflated portfolio to attract buyer leads, who were then redirected to the genuine listings.

Outcome: Following complaints from multiple agents and consumers, the agency was removed from The NLS, reported to the local consumer protection authority, and faced civil claims from two agents whose listings had been scraped and two buyers who had travelled to Spain to view properties that did not exist as advertised.

Case Study 2: The Undisclosed Community Debt

An agent in Marbella sold an apartment in a large urbanisation without disclosing that the community of owners had approved a special assessment (derrama) of 15,000 euros per apartment for major structural repairs. The agent was aware of the assessment, having attended the community meeting as proxy for another owner in the same complex. The buyer discovered the debt only after completion, when they received a demand for payment.

Legal analysis: Under Article 9.1(e) of the Ley de Propiedad Horizontal, the new owner is liable for community debts corresponding to the current year and the three preceding years. However, the buyer argued — successfully — that the agent’s failure to disclose a known material fact constituted a breach of the duty of good faith under Article 1258 of the Código Civil, entitling the buyer to compensation from the agent.

Case Study 3: The Pressured Reservation

An elderly British couple viewed a villa in Alicante province. During the viewing, the agent told them another couple was “coming to sign a reservation that afternoon” and that if they wanted the property, they needed to sign and pay a 10,000 euro deposit immediately. The agent drove them directly to the agency office, where they signed a reservation agreement in Spanish (which they did not read or fully understand) and paid by card. No other buyer existed. When they subsequently obtained legal advice and attempted to withdraw within 48 hours, the agent refused to return the deposit.

Legal analysis: This scenario engages multiple protections. The artificial urgency constitutes an aggressive commercial practice under consumer protection law. The contract was signed off-premises, potentially triggering a 14-day withdrawal right. The failure to provide the contract in a language the buyers understood, or to allow them time to seek legal advice, further supported their claim. The NLS disciplinary process resulted in the agent’s suspension and a requirement to refund the deposit.

How to Report Breaches to The NLS

The NLS provides a clear and accessible process for reporting ethical breaches:

Online complaint form: Available through the NLS platform, the form captures the essential details — the agent involved, the nature of the breach, the dates and circumstances, and any supporting evidence.
Evidence submission: Complainants can upload documents, photographs, email correspondence, screenshots of listings, and any other relevant evidence.
Confidentiality: The complaint process is confidential. The identity of the complainant is not disclosed to the agent unless the complainant consents, or disclosure is necessary for a fair process.
Acknowledgment: The NLS acknowledges receipt within 5 business days and provides a reference number for tracking.
Investigation timeline: Most investigations are completed within 60 days, though complex cases may require longer.

Consequences of Ethical Breaches

The NLS operates a graduated system of consequences, reflecting the seriousness of the breach and any mitigating or aggravating factors:

Level 1: Formal Warning

For minor breaches — a first-time failure to update a listing status promptly, for example — a formal warning is issued and recorded. No further action is taken unless the behaviour is repeated.

Level 2: Mandatory Retraining

For breaches that suggest a gap in knowledge rather than deliberate misconduct — such as inadequate data protection practices — the agent must complete specified training modules and demonstrate compliance before their NLS status is restored to good standing.

Level 3: Suspension

For serious breaches — dual representation without disclosure, price manipulation, or sustained ghost listings — the agent is suspended from The NLS for a specified period (typically 3 to 12 months). During suspension, all listings are removed and the agent cannot access cooperation features.

Level 4: Permanent Removal

For the most serious breaches — fraud, systematic deception, exploitation of vulnerable persons, or repeated serious misconduct — the agent is permanently removed from The NLS with no right to reapply. The removal is recorded and may be disclosed to other professional bodies or platforms on request.

Civil Liability

Beyond NLS disciplinary consequences, agents who commit ethical breaches may face civil liability to affected parties. This can include claims for compensation for financial losses, damages for distress and inconvenience, and legal costs. Under Spanish law, the limitation period for contractual claims is five years (Article 1964 of the Código Civil, as amended by Ley 42/2015), and for non-contractual (tort) claims, one year (Article 1968).

Prevention: Building an Ethical Practice

Avoiding ethical breaches is not just about knowing the rules — it is about building systems and habits that make compliance automatic:

Listing accuracy checks: Before publishing any listing, run through a checklist — mandate confirmed, details verified, photographs current, price agreed with owner, status accurate.
Fee transparency template: Use a standard disclosure document that sets out all fees, commissions, and financial interests at the start of every client relationship.
Conflict of interest register: Maintain a log of all dual representations, with evidence of disclosure and consent.
Continuing education: Stay current on legal changes, market developments, and best practices. Ignorance is never an acceptable defence.
Professional network: Build relationships with lawyers, surveyors, and other professionals who can provide independent verification of property status and legal issues.
When in doubt, disclose: If you are unsure whether information is material, err on the side of disclosure. It is always better to over-disclose than to face a complaint or claim for non-disclosure.

Summary

Ethical breaches in the Spanish real estate market are common, varied, and harmful. From ghost listings and price manipulation to dual representation without disclosure, hidden fees, listing scraping, pressure tactics, and misrepresentation of legal status — these practices damage consumers, undermine professional agents, and erode market integrity.

The NLS Code of Conduct exists to prevent these breaches through clear standards, and to address them when they occur through a fair but firm enforcement process. As an NLS-certified agent, your commitment to avoiding these practices — and to reporting them when you encounter them — is essential to maintaining the professional standards that benefit everyone in the market.

Key Takeaways

Ghost listings are a misleading commercial practice with potential legal consequences under consumer protection and competition law
Price manipulation — both inflation and underquoting — harms sellers, buyers, and market integrity
Dual representation requires full, informed, written consent from all parties
All fees, commissions, and financial interests must be disclosed before engagement
Scraping and republishing listings raises copyright, data protection, and unfair competition issues
Vulnerable buyers are entitled to enhanced protection under consumer law
Misrepresenting legal status — particularly regarding habitability certificates and planning compliance — is one of the most serious breaches
The NLS operates a graduated enforcement system from warnings to permanent removal
Agents also face potential civil liability for breaches — professional indemnity insurance is essential