Florida Real Estate Brokers Guide Sixth Edition Linda
Florida Real Estate Broker’s Guide, Sixth Edition Linda L. Crawford Edward J. O’Donnell Copyright © 2017 Kaplan, Inc. All rights reserved.
Unit 10 Brokerage Relationships and Disclosure Requirements
Law of Agency • When people delegate authority to another to act on their behalf, an agency relationship is created • Two types of law – Common Law (sometimes called unwritten law) • Case law – Statutory Law • Statutes (legislature) and rules (FREC)3 © 2017 Kaplan, Inc.
Brokerage Relationships in Florida • Three options in real estate transactions • Transaction broker for buyer and/or seller • Single agent for buyer or seller (not both) • No brokerage relationship 4 © 2017 Kaplan, Inc.
Dual Agency Florida law prohibits a broker from creating a fiduciary relationship with both the buyer and the seller Dual Agent: a broker who represents as a fiduciary to both the buyer and the seller in a real estate transaction Fiduciary is relationship of trust and confidence between broker as agent and the principal 5 © 2017 Kaplan, Inc.
Residential Transactions • Residential sales are defined as – sale of improved residential property of four or fewer units; – unimproved residential property intended for four or fewer units; or – agricultural property of 10 acres or less. 6 © 2017 Kaplan, Inc.
Disclosure Requirements Do Not Apply To • Nonresidential transactions • Rental or leasing, unless there is an option to purchase property with four or fewer residential units • Auctions • Appraisals • Business opportunities 7 © 2017 Kaplan, Inc.
Timing of Brokerage Disclosure • Nonrepresentation – The no brokerage relationship notice must be disclosed in writing before showing property • Single agent – Single agent disclosure before, or at the time of, entering into a listing agreement or an agreement for representation, or before the showing of property, whichever occurs first 8 © 2017 Kaplan, Inc.
Transaction Broker Relationship • Under Florida law, it is presumed licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established • Licensees are NOT required to give written transaction broker notice 9 © 2017 Kaplan, Inc.
Recordkeeping Requirements • Brokers must retain brokerage relationship disclosure documents for five years – All residential transactions that result in a written contract – All nonresidential transactions that utilize designated sales associates – Includes files of properties that fail to close 10 © 2017 Kaplan, Inc.
Exceptions to Disclosure Requirements • Licensee knows that a single agent or transaction broker represents buyer or seller • Bona fide open house or model showing • Unanticipated casual encounters • Responding to general questions of advertised property • Communications concern services offered • When selling new residential units built by the owner 11 © 2017 Kaplan, Inc.
No Brokerage Relationship • Seller or buyer can choose not to be represented • Broker facilitates sale/purchase • Law does not require buyers and sellers be represented 12 © 2017 Kaplan, Inc.
No Brokerage Relationship Duties • Account for all funds • Disclose all known facts that materially affect the value of residential property that are not readily observable to the buyer • Deal honestly and fairly 13 © 2017 Kaplan, Inc.
Single Agent Relationship • Single agent - a broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction • Principal - the party with whom a licensee has entered into a single agent relationship • In an agency relationship, the broker owes fiduciary duties to the principal 14 © 2017 Kaplan, Inc.
Subagent • Authorized to assist and represent the agent • Duties are delegated by the original agent – Broker’s sales associates are general agents of the broker and subagents of the broker’s principals – The broker is an agent of the principal – Sales associates owe same fiduciary obligations to the principal as does broker • Sales associates cannot have a different relationship than their broker 15 © 2017 Kaplan, Inc.
Single Agent Duties • Account for all funds • Disclose all known facts that materially affect the value of residential real property that are not readily observable • Deal honestly and fairly • Confidentiality • Obedience • Loyalty • Full disclosure • Use skill, care, and diligence • Present all offers and counteroffers timely 16 © 2017 Kaplan, Inc.
Transaction Broker Relationship • Parties give up rights to undivided loyalty • Limited representation allows licensee to assist both buyer and seller • Licensee cannot represent one party to detriment of other party • Not required to give customers a written transaction broker notice but still have duties of a transaction broker 17 © 2017 Kaplan, Inc.
Limited Representation • Transaction broker – Provides limited representation to customer (buyer, seller or both) – Does not represent buyer or seller as a fiduciary or as a single agent – Customer NOT responsible for the acts of licensee 18 © 2017 Kaplan, Inc.
Transaction Broker Duties • Account for all funds • Disclose all known facts that materially affect the value of real property not readily observable • Deal honestly and fairly • Use skill, care, and diligence • Present all offers and counteroffers timely • Exercise limited confidentiality, unless waived in writing by a party • Additional duties mutually agreed to 19 © 2017 Kaplan, Inc.
Transition to Another Relationship • Broker may change relationship with customer/principal • To transition from a single agent to a transaction broker, the principal must sign the Consent to Transition to Transaction Broker Notice 20 © 2017 Kaplan, Inc.
Example • Sales Associates Yvette and Zach work for Extra-Fine Realty. Yvette has just listed the house at 3456 Main St. as a single agent for the seller. Zach is a single agent for buyer Black. If buyer Black wants to view the house at 3456 Main St. , how can this legally happen? 21 © 2017 Kaplan, Inc.
Solution • Because Extra-Fine Realty is acting as a single agent for both the seller of 3456 Main St. and for buyer Black, both the seller and the buyer would have to sign a Consent to Transition to Transaction Broker notice to show this property to buyer Black. 22 © 2017 Kaplan, Inc.
Designated Sales Associates • At the request of the buyer and seller, the broker may designate sales associates to act as single agents for different customers in the same transaction – Nonresidential transactions only – Buyer and seller each must have assets of at least $1 million – Sales associates must give respective principals: • Single agent notice • Designated sales associate notice © 2017 Kaplan, Inc. 23
Terminating a Brokerage Relationship – Fulfillment of brokerage relationship purpose – Mutual agreement to terminate – Expiration of agreement – Broker renounces by giving notice – Principal revokes relationship by giving notice – Death of broker – Destruction of property or eminent domain – Bankruptcy of principal or customer 24 © 2017 Kaplan, Inc.
The End © 2017 Kaplan, Inc.
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