Consumer Notice
Agency Law Defines Realtor Roles – Pennsylvania Laws
An “Agency Disclosure” law went into effect on November 25, 1999. This legislation helps consumers by clarifying up front and in writing who works for whom in a real estate transaction and letting consumers know what options for service are available.
Regardless if you’re attending an open house or interviewing a Realtor to help you buy or sell a home, a Realtor who asks you to sign the Consumer Notice Form is doing his or her job and fulfilling the requirement of this law. If you first contact a Realtor by phone, the Realtor is required to review the oral disclosure with you at that time. The Consumer Notice outlines your options for representation in a real estate transaction.
The form is not a contract (as the form boldly states) and does not commit the consumer to any relationship. It simply outlines the real estate services owed to the consumer by any real estate licensee. It also differentiates the five types of relationships a real estate licensee may have with a consumer.
1) Seller Agency - is a relationship where the licensee, upon entering into a written agreement, works only for a seller/landlord.
2) Buyer Agency – is a relationship where the licensee, upon entering into a written agreement, works only for the buyer/tenant.
3) Dual Agency – is a relationship where the licensee acts as the agent for both the seller/landlord and the buyer/tenant in the same transaction with the written consent of all parties. Should dual agency occur in your transaction, you will be informed. As a result, the same level of fiduciary responsibility could not apply.
4) Designated Agency – the employing broker may, with your consent, designate one or more licensees from their company to act exclusively as the agent for the seller/landlord and one or more licensees to act exclusively as the agent for the buyer/tenant. Other licensees in the company who are not designated may represent another party and should not be provided with any confidential information.
5) Transaction Licensee – is a broker or salesperson who provide communication or document preparation services or performs other acts for which a license is required WITHOUT being the agent or advocate for either the seller/landlord or the buyer/tenant. Upon entering into a written agreement or disclosure statement, the transaction licensee has the additional duty of limited confidentiality.
While this practice may seem alarming now, with time it will be seen as just one of the many forms to be completed to adhere to real estate laws in Pennsylvania. By having this Agency Law, Pennsylvania joins 47 other states in clarifying agency relationships between consumers and real estate practitioners.
CLICK HERE FOR A COPY OF THE CONSUMER NOTICE
Oral Consumer Notice
Act 47 of 2000 permits licensees to provide an oral disclosure of the Consumer Notice on the telephone provided it is followed up with a written Consumer Notice at the first meeting with the consumer. NOTE: This oral disclosure may not be used by owners/landlords, their employees, or their agents.
The language of the oral disclosure is as follows and must be read verbatim: “The Real Estate Law requires that I provide you with a written consumer notice that describes the various business relationship choices that you may have with a real estate licensee. Since we are discussing real estate without you having the benefit of the Consumer Notice, I have the duty to advise you that any information you give me at this time is not considered to be confidential, and any information you give me will not be considered confidential unless and until you and I enter into a business relationship. At our first meeting I will provide you with a written consumer notice which explains those business relationships and my corresponding duties to you.”
Maryland Agency Disclosure Law
Agents Who Represent the Seller
Seller’s Agent: A seller’s agent works for the real estate company that lists and markets the property for the sellers, or landlords, and exclusively represents the sellers or landlords. That means that he or she may assist the buyer or tenant in purchasing or renting the property, but his or her duty of loyalty is only to the sellers or landlords. The seller pays the seller’s agent’s fee as specified in a written listing agreement.
Cooperating Agent: A cooperating agent works for a real estate company different from the company for which the seller’s agent works. The cooperating agent can assist a buyer or tenant in purchasing or renting a property, but his or her duty of loyalty is only to the sellers or landlords. The cooperating agent’s fee is paid by the sellers or landlords through the seller’s agent’s company.
Agents Who Represent the Buyer
Presumed Buyer’s Agent (no written agreement): When a person goes to a real estate agent for assistance in finding a home to buy or rent, the agent is presumed to be representing the buyer and can show the buyer properties that are not listed by the agent’s real estate company. A presumed buyer’s agent may not make or prepare an offer or negotiate a sale for the buyer. The buyer does not have an obligation to pay anything to the presumed agent.
If for any reason the buyer does not want the agent to represent him or her as a presumed agent, either initially or at any time, the buyer can decline or terminate a presumed agency relationship simply by saying so.
Buyer’s Agent (by written agreement): A buyer or tenant may enter into a written contract with a real estate agent which provides that the agent will represent the buyer or tenant in locating a property to buy or rent. The agent is then known as the buyer’s agent. That agent assists the buyer in evaluating properties and preparing offers, and negotiates in the best interests of the buyer or tenant. The agent’s fee is paid according to the written agreement between the agent and the buyer or tenant. If you as a buyer or tenant wish to have an agent represent you exclusively, you must enter into a written buyer agency agreement.
Dual Agents
The possibility of dual agency arises when the buyer’s agent and the seller’s agent both work for the same real estate company, and the buyer is interested in property listed by that company. The real estate company, or broker, is called the “dual agent.” Dual agents do not act exclusively in the interests of either the seller or buyer, or landlord or tenant, and therefore cannot give undivided loyalty to either party. There may be a conflict of interest because the interests of the seller and buyer may be different or adverse.
If both seller and buyer, or landlord and tenant, agree to dual agency by signing a Consent For Dual Agency form, then the real estate company (the “dual agent”) will assign one agent to represent the seller or landlord (the seller’s “intra-company agent”) and another agent to represent the buyer or tenant (the buyer’s “intra-company agent”). Intra-company agents may provide the same services to their clients as exclusive seller’s or buyer’s agents, including advising their clients as to price and negotiation strategy, provided the clients have both consented to be represented by dual agency.
If either party does not agree to dual agency, the real estate company may withdraw the agency agreement for that particular property with either the buyer or seller, or both. If the seller’s agreement is terminated, the seller must then either represent him or herself or arrange to be represented by an agent from another real estate company. If the buyer’s agreement is terminated, the buyer or tenant may choose to enter into a written buyer agency agreement with an agent from a different company. Alternatively, the buyer or tenant may choose not to be represented by an agent of his or her own but simply to receive assistance from the seller’s agent, from another agent in that company, or from a cooperating agent from another company.
No matter what type of agent you choose to work with, you have the following rights and responsibilities in selling or buying or renting property:
- Real estate agents are obligated by law to treat all parties to a real estate transaction honestly and fairly. They must exercise reasonable care and diligence and maintain the confidentiality of clients. They must not discriminate in the offering of properties; they must promptly present each written offer or counteroffer to the other party; and they must answer questions truthfully.
- Real estate agents must disclose all material facts that they know or should know relating to a property. An agent’s duty to maintain confidentiality does not apply to the disclosure of material facts about a property.
- All agreements with real estate agents should be in writing and should explain the duties and obligations of the agent. The agreement should explain how the agent will be paid and any fee-sharing agreements with other agents.
- You have the responsibility to protect your own interests. You should carefully read all agreements to make sure they accurately reflect your understanding. A real estate agent is qualified to advise you on real estate matters only. If you need legal or tax advice, it is your responsibility to consult a licensed attorney or accountant.
Any complaints about a real estate agent may be filed with the Real Estate Commission at 500 North Calvert Street, Baltimore, MD 21202. (410) 230-6200
Bob Carney
