Casner & Edwards

Real Estate Brokerage Law

DISCLOSURE OF RELATIONSHIPS

The relationship between buyers and sellers of residential real estate and the real estate brokers or salespersons who market properties is an area of law that has changed considerably in the past 20 years. In the 1980s most real estate agents who showed homes to buyers represented the sellers. Then in the early 1990s the practice of buyer representation blossomed. Because agents representing both buyers and sellers may be affiliated with the same broker, conflicts resulting from “dual agency” generated considerable confusion and litigation. On June 25, 2004, Governor Romney signed into law a clarification of potential relationships with brokers, giving a variety of choices to consumers. 

The law provides a mechanism for buyers and sellers to work with agents who are affiliated with the same brokerage company either as “dual agents” who must be neutral as to conflicting interests of the buyer and seller or as “designated agents” who may continue to advise the person they represent, despite conflicting interests of another client of the brokerage. When the law becomes effective buyers and sellers will be able to consent in writing to designation of one agent to represent the seller and another agent within the same office to represent buyer. Where both are affiliated with the same broker of record, that broker must remain neutral as a “dual agent.” The new statute changes the current practice by requiring written authorization from residential sellers before the listing broker may offer to cooperate with brokers from other offices as subagents of the sellers. Finally, the law gives statutory recognition to real estate brokers and salespersons who work in a non-agency capacity as “facilitators” but do not represent either the buyer or seller.

Robert S. Kutner participated in drafting the new agency statute and regulations and has lectured extensively on the new legislation. The legislation became effective on July 1, 2005.

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