Chapter 4 – Snapshot Review

 

Authorized Relationships, Duties, and Disclosure

Snapshot Review 

ESSENTIALS OF REAL ESTATE AGENCY

Historical perspective

● agency law grows out of common law and statutory law

● essence of agency relationship: trust, confidence, mutual good faith

 

Basic roles

● principal, or client, hires agent (broker) to find a ready, willing, and able customer (buyer, seller, tenant); client-agent fiduciary foundations: trust, confidence, good faith

 

Types of agency

● universal: represent in business and personal matters; can contract for principal

● general: represent in business matters; agent can contract for principal

● special: represent in single business transaction; normally agent cannot contract for principal; the brokerage relationship is usually special agency

 

Creating an agency relationship

● created by express written or oral agreement or as an implied agreement by actions of either party

 

Terminating an agency relationship

● causes: fulfillment; expiration; mutual agreement; incapacity; abandonment; or destruction of property; renunciation; breach; bankruptcy; revocation of license

 

FIDUCIARY DUTIES

Fiduciary duties to the client

● skill, care, diligence; loyalty; obedience; confidentiality; disclosure; accounting

Agent’s duties to the customer

●. honesty and fair dealing; exercise of reasonable care and skill; proper disclosures; danger areas: misrepresentation; advising beyond expertise

Principal’s general duties

● availability; provide information; compensation

Breach of duty

● liabilities: loss of listing, compensation, license; suit for damages

 

BROKERAGE RELATIONSHIP  DISCLOSURE ACT

Transaction types

● written disclosure required for single agent or no-brokerage relationship in residential sale transaction

● residential sale: property with four or fewer dwelling units or zoned for four or fewer dwelling units

Disclosure notices

● duties, not representation choices

● separate forms for each representation type

● FL Brokerage Relationship Disclosure Act allows transaction broker, single agent, and nonrepresentation

● must disclose duties of each relationship

 

Nonrepresentation relationships

● no brokerage relationship with buyer or seller; still owe some duties Single agency relationships

● seller agency; buyer agency; no dual agency in Florida

● broker’s associates are agents of the broker, subagents of the broker’s client; owe same duties to client as broker

 

Transaction broker relationships

● allows broker to represent both buyer and seller in same transaction; no fiduciary duties but limited duties still owed and must be disclosed

● relationship presumed unless another agency agreement is signed

● limited confidentiality – no disclosure that seller will lower price, buyer will raise offer, either will agree to other financing terms, either party’s motivation, other information requested to remain confidential

Transitioning to transaction broker

● can transition from single agent to transaction broker with principal’s written consent at any time

● disclosure requirements apply to residential and agricultural properties with exemptions

● disclosure provided prior to agreement execution or property showing; to meet type requirements and include signature line and duties

Designated sales associate

● nonresidential buyer and seller need assets in excess of $1 million; broker to designate separate sales associates to each as single agent

● standard disclosure requirements apply plus written assets disclosure and request for designated sales associates to follow required language

● must offer standard single agent duties

Documentation

● all records to be kept for 5 years, including disclosures related to written contracts; records related to legal proceedings to be kept for 2 years within the 5 or in addition to the 5 years