Agency (4 hours)
by Dr. Larry Hasbrouck
AGENCY: Delegation, One to Another Relationship
Fiduciary Relationship: Duties, obligations, good faith, loyalty
AGENT: Acts on behalf and represents another
Broker to client: (principal)
Sales persons – Subagent to Broker
COMPENSATION: Fee paid to a BROKER
SINGLE AGENCY: Represent only one party to the transaction
GENERAL: General Duties (Property Manager)
SPECIAL: One specific act or transaction under detailed instruction (A Listing Broker or Buyer’s Broker)
Agency Relationship Disclosure must be at The First Substantive Meeting.
If Parties to a transaction change, new disclosures mus be made and signed by all parties.
BUYER BROKERAGE AGREEMENTS:
FIRMLY ESTABLISHES AGENCY
(BUYER NOT SELLER)
OPINION vs. FACT
PUFFING: Exaggeration of a property’s benefits (An example would be an agent telling their client that a property has a fantastic ocean view. When the client gets to the property he finds the view is a peek a boo view between to buildings.)
LATENT DEFECTS: Unseen Defects. If known to the Seller, he must disclose. Defects not discovered by ordinary inspection.
STIGMATIZED PROPERTIES: The site of a murder or suicide. A haunted property or place where there was cult activity. A House with an unfortunate situation.
Lead-Base Paint, Toxic Waste Dumping, Underground Storage Tanks, Contaminated Soil or Water, Chemical/Nuclear Facilities, Radon, Asbestos, etc.
ask an agent whom they represent when you get a call on a company listing.
to be careful what they say to BUYERS and other agents.
Don’t repeat confidential information
Require BUYER agents and Subagents to disclose their status when making appointments to show property.
Always read the other Broker’s contract
Ask the cooperating agent who he/she represents
Explain agency again to your client (until you are sure they understand)
Mississippi State Specific Agency
§ 89‐1‐519. Agent; extent of agency.
Any person or entity, other than a duly licensed real estate broker or salesperson acting in the capacity of an escrow agent for the transfer of real property subject to Mississippi Real Estate License Law shall not be deemed the agent of the transferor or transferee for purposes of the disclosure requirements of Mississippi Real Estate License Law unless the person or entity is empowered to so act by an express written agreement to that effect. The extent of such an agency shall be governed by the written agreement.
(1) If more than one (1) licensed real estate broker is acting as an agent in a transaction subject Mississippi Real Estate Law, the broker who has obtained the offer made by the transferee shall, except as otherwise provided in Mississippi Real Estate License Law, deliver the disclosure required by Mississippi Real Estate License Law to the transferee, unless the transferor has given other written instructions for delivery.(2) If a licensed real estate broker responsible for delivering the disclosures under this section cannot obtain the disclosure document required and does not have written assurance from the transferee that the disclosure has been received, the broker shall advise the transferee in writing of his rights to the disclosure. A licensed real estate broker responsible for delivering disclosures under this section shall maintain a record of the action taken to effect compliance.
§ 89‐1‐523.No transfer subject to Mississippi Real Estate License Law shall be invalidated solely because of the failure of any person to comply with any provision of Mississippi Real Estate License Law However, any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of Mississippi Real Estate License Law shall be liable in the amount of actual damages suffered by a transferee.
§ 89‐1‐525. Enforcement by Mississippi Real Estate Commission.
The Mississippi Real Estate Commission is authorized to enforce the provisions of Mississippi Real Estate License Law. Any violation of the provisions of Mississippi Real Estate License Law shall be treated in the same manner as a violation of the Real Estate Broker License Law of 1954, Section 73‐35‐1 et seq., and shall be subject to same penalties as provided in that chapter.
(2) A failure to disclose in any real estate transaction any information that is provided or maintained, or is required to be provided or maintained, in accordance with Mississippi Real Estate License Law, shall not give rise to a cause of action against an owner of real property, a licensed real estate broker or any affiliated licensee of the broker. Likewise, no cause of action shall arise against any licensed real estate broker or affiliated licensee of the broker for revealing information to a seller or buyer of real estate in accordance with Mississippi Real Estate License Law. Any factors related to this paragraph, if known to a property owner or licensee shall be disclosed if requested by a consumer.
AGENCY RELATIONSHIP DISCLOSURE
Consumers shall be fully informed of the agency relationships in real estate transactions identified in Section 73‐35‐3. This rule places specific requirements on Brokers to disclose their agency relationship. This does not abrogate the laws of agency as recognized under common law and compliance with the prescribed disclosures will not always guarantee that a Broker has fulfilled all of his responsibilities under the common law of agency. Compliance will be necessary in order to protect licensees from impositions of sanctions against their license by the Mississippi Real Estate Commission.
Special situations, where unusual facts exist or where one or more parties involved are especially vulnerable, could require additional disclosures not contemplated by this rule. In such cases, Brokers should seek legal advice prior to entering into an agency relationship.
“Fiduciary Responsibilities” are those duties due the principal (client) in areal estate transaction are:
(1) ‘Loyalty’‐ the agent must put the interests of the principal above the interests of the agent or any third party.
(2) ‘Obedience’‐ the agent agrees to obey any lawful instruction from the principal in the execution of the transaction that is the subject of the agency.
(3) ‘Disclosure’‐ the agent must disclose to the principal any information the agent becomes aware of in connection with the agency.
(4) ‘Confidentiality’‐ the agent must keep private information provided by the principal and information which would give a customer an advantage over the principal strictly confidential, unless the agent has the principal’s permission to disclose the information. This duty lives on after the agency relationship is terminated.
(5) ‘Reasonable skill, care and diligence’ ‐ the agent must perform all duties with the care and diligence which may be reasonably expected of someone undertaking such duties.
(6) ‘Full accounting’‐ the agent must provide a full accounting of any money or goods coming into the agent’s possession which belong to the principal or other parties.
(h) “First Substantive Meeting” This is the point in time when something of significance occurs that makes you KNOW your customer will now become a Client or Customer. At this moment you need to present the form, Working With A Real Estate Broker.
a) In a single agency, a broker is required to disclose, in writing, to the party for whom the broker is an agent in a real estate transaction that the broker is the agent of the party. The written disclosure must be made before the time an agreement for representation is entered into between the broker and the party. This shall be on an MREC Agency Disclosure Form.
b) In a single agency, a real estate broker is required to disclose, in writing, to the party for whom the broker is not an agent, that the broker is an agent of another party in the transaction. The written disclosure shall be made at the time of the first substantive meeting with the party for whom the broker is not an agent. This shall be on an MREC Agency Disclosure Form.
c) Brokers operating in the capacity of disclosed dual agents must obtain the informed written consent of all parties prior to or at the time of formalization of the dual agency. Informed written consent to disclosed dual agency shall be deemed to have been timely obtained if all of the following occur:
(1) The seller, at the time an agreement for representation is entered into between the broker and seller, gives written consent to dual agency by signing the Consent To Dual Agency portion of MREC Form A.
(2) The buyer, at the time an agreement for representation is entered into between the broker and buyer, gives written consent to dual agency by signing the Consent To Dual Agency portion of MREC Form A.
(3) The Broker must confirm that the buyer(s) understands and consents to the consensual dual agency relationship prior to the signing of an offer to purchase. The buyer shall give his/her consent by signing the MREC Dual Agency Confirmation Form which shall be attached to the offer to purchase. The Broker must confirm that the seller(s) also understands and consents to the consensual dual agency relationship prior to presenting the offer to purchase. The seller shall give his/her consent by signing the MREC Dual Agency Confirmation Form attached to the buyer’s offer. The form shall remain attached to the offer to purchase regardless of the outcome of the offer to purchase.
d) In the event the agency relationship changes between the parties to a real estate transaction, new disclosure forms will be acknowledged by all parties involved.
e) In the event one or more parties are not available to sign one or more of the Disclosure Forms, the disclosure will be accomplished orally. The applicable form will be so noted by the Broker and said forms will be forwarded for signature(s) as soon as possible. Written electronic transmission will fulfill this requirement.
f) In the event any party receiving a disclosure form requests not to sign that form acknowledging receipt, the Broker shall annotate the form with the following statement:
A COPY OF THIS FORM WAS DELIVERED TO _______________
DATE__________________. RECIPIENT DECLINED TO ACKNOWLEDGE RECEIPT
OF THIS FORM.”
g) The terms of the agency relationship shall be ratified on all contracts pertaining to real estate transactions.
h) The Commission mandated disclosure form may be duplicated in content and size but not altered.
i) Completed Agency Disclosure Forms shall be maintained in accordance with Rules and Regulations IV. B (6).