What Companies Need To Know

Be careful when discussing the new Brokerage Relationships Act with other companies. It may be considered a federal anti-trust violation if such discussions lead to an agreement about which brokerage relationships to adopt. Don’t say, for example: "I’d like to go all transaction brokerage with no single-party brokerage, as long as everyone else would do the same." This would likely be considered a restrain of trade.

Also, do not discuss a boycott of any company that adopts a brokerage arrangement that you do not approve.

Do not allow any agents under you do either of the above as you can be held liable for the actions of your agents.

Penalty for a violation of the Sherman Anti-Trust Act of 1890 can be as much as three years in prison.

Be especially careful of public statements which might imply that there are any industry agreements about which brokerage relationships to adopt. Do not imply that any trade association has recommend one relationship over any other.

The new law did not abrogate the law of agency! It only abrogated the "duties and responsibilities" of a licensee under the common law of agency and replaced them with "black law" in the new statute (858-360). Agency still exists. However, it is now illegal for you to act as an agent for buyers, sellers, landlords, or tenants, or for other brokers in a transaction. If you accidentally become an agent under the common law, because of your actions, the consequences can be grave! Remember: an agency remedy for a violation of a fiduciary duty is loss of any entitlement to be paid! You could lose your commissions!

Do not talk like an agent. Do not give the impression to the public that you are an agent. Don't call the person you are performing services for a "client" or "principal", do not say you are an "advocate" for any party (even if you are acting as a Single Party broker), do not say you are representing any party (agents represent people). If called a "real estate agent" by a party, politely remind them that you are a real estate broker and that you no longer act as an agent. Having someone call you an agent in public, could make you an agent under the common law. You must renounce "implied" or "apparent" agency.

"Agency Disclosure Dialog"...

Seller: "Mr. Smith, let me introduce you to my Real Estate Agent, Ted Jones."

Broker: "Time Out!" Making a "T" with his hands, with a smile on his face, "while I am a broker marketing this fine home, we in the industry are no longer agents, and my company requires me to disclosure this whenever I am called an agent. We want to be very sure we obey the new law. Pleased to meet you Mr. Jones."

After a few times of making a "T" and disclosing that you are not an agent, the point will get across. Doing this will make you seem more professional. It will also be more memorable in the future if you are called to testify in court.

What new terminology should you use?

(Note: this is brokerage advice. Not legal advice. Check an attorney for legal advice.)

For Use

Example Conversation:

"Mr. Jones, let me introduce John Smith, I am his Single Party broker, which means as my employing party, I am working for the primary benefit of Mr. Jones in the sale of his home.

"Mr. Jones, this is Al Thomas, and I am working for him as a Transaction broker. Our brokerage agreement allows me to assist Mr. Thomas in the purchase of a home but I am not working for his primary benefit as I am for you. Of course, I can benefit Mr. Thomas, like trying to find him the best financing so his mortgage payments would be lower, but I cannot put his interest ahead of yours in a transaction. That's the difference.

"Also, it is important to note, that I am not anyone's agent in this transaction. Licensees no longer act as agents in real estate transactions."

Train and Supervise Your Agents.

Then put proof of this on file in case of a future legal problem or office audit by the OREC. Consider using the Compliance Form Provided on this Site.