You are meeting your real estate agent for the first time. You are buying, selling or leasing real property. The agent hands you a form and ask you to sign it before you begin this new and wonderful (working together) relationship. You just signed a disclosure form on how you are being represented. Did you understand what you were signing?
New York State Disclosure Form for Buyer and Seller. Reads like this:
THIS IS NOT A CONTRACT
New York State law requires real estate licensees who are acting as agents of buyers or sellers of property to advise the potential buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates. This disclosure will help you to make informed choices about your relationship with the real estate broker and its sales agents.Throughout the transaction you may receive more than one disclosure form. The law may require each agent assisting in the transaction to present you with this disclosure form. A real estate agent is a person qualified to advise about real estate. If you need legal, tax or other advice, consult with a professional in that field.
Disclosure Regarding Real Estate
Agency Relationships
Seller’s Agent
A seller’s agent is an agent who is engaged by a seller to represent the seller’s interests. The seller’s agent does this by securing a buyer for the seller’s home at a price and on terms acceptable to the seller. A seller’s agent has, without limitation, the following fiduciary duties to the seller: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account. A seller’s agent does not represent the interests of the buyer. The obligations of a seller’s agent are also subject to any specific provisions set forth in an agreement between the agent and the seller. In dealings with the buyer, a seller’s agent should (a) exercise reasonable skill and care in performance of the agent’s duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law.
Buyer’s Agent
A buyer’s agent is an agent who is engaged by a buyer to represent the buyer’s interests. The buyer’s agent does this by negotiating the purchase of a home at a price and on terms acceptable to the buyer. A buyer’s agent has,without limitation, the following fiduciary duties to the buyer: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account. A buyer’s agent does not represent the interest of the seller. The obligations of a buyer’s agent are also subject to any specific provisions set forth in an agreement between the agent and the buyer. In dealings with the seller, a buyer’s agent should (a) exercise reasonable skill and care in performance of the agent’s duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the buyer’s ability and/or willingness to perform a contract to acquire seller’s property that are not inconsistent with the agent’s fiduciary duties to the buyer.
Broker’s Agents
A broker’s agent is an agent that cooperates or is engaged by a listing agent or a buyer’s agent (but does not work for the same firm as the listing agent or buyer’s agent) to assist the listing agent or buyer’s agent in locating a property to sell or buy, respectively, for the listing agent’s seller or the buyer agent’s buyer. The broker’s agent does not have a direct relationship with the buyer or seller and the buyer or seller can not provide instructions or direction directly to the broker’s agent. The buyer and the seller therefore do not have vicarious liability for the acts of the broker’s agent. The listing agent or buyer’s agent do provide direction and instruction to the broker’s agent and therefore the listing agent or buyer’s agent will have liability for the acts of the broker’s agent.
Dual Agent
A real estate broker may represent both the buyer and seller if both the buyer and seller give their informed consent in writing. In such a dual agency situation, the agent will not be able to provide the full range of fiduciary duties to the buyer and seller. The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent, and the buyer and seller. An agent acting as a dual agent must explain both the buyer and seller that the agent is acting for the other party as well. The agent should also explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are giving up their right to undivided loyalty. A buyer or seller should carefully consider the possible consequences of a dual agency relationship before agreeing to such representation. A seller or buyer may provide advance informed consent to dual agency by indicating the same on this form.
Dual Agent with Designated Sales Agents
If the buyer and seller provide their informed consent in writing, the principals and the real estate broker who represents both parties as a dual agent may designate a sales agent to represent the buyer and another sales agent to represent the seller to negotiate the purchase and sale of real estate. A sales agent works under the supervision of the real estate broker. With the informed consent of the buyer and the seller in writing, the designated sales agent for the buyer will function as the buyer’s agent representing the interests of and advocating on behalf of the buyer and the designated sales agent for the seller will function as the seller’s agent representing the interests of and advocating on behalf of the seller in the negotiations between the buyer and seller. A designated sales agent cannot provide the full range of fiduciary duties to the buyer or seller. The designated sales agent must explain that like the dual agent under whose supervision they function, they cannot provide undivided loyalty. A buyer or seller should carefully consider the possible consequences of a dual agency relationship with designated sales agents before agreeing to such representation. A seller or buyer may provide advance informed consent to dual agency with designated sales agents by indicating the same on this form.
This form was provided to me by____________________(print name of licensee) of___________________(print name of company or brokerage), a licensed real estate broker acting in the interest of the: Seller or Buyer
Remember this. THIS IS NOT A CONTRACT. It is just a disclosure of who is working for whom in a Real Property transaction and how.
BIG QUESTIONS?
Do you know what you’re signing?
Do you know who is working for whom?
Is the agent working for the seller?
Is the agent working for the buyer?
Is the agent working for both buyer and the seller?
Is their a SECRET AGENT?
Lets answer some questions.
Q: What is Agency Disclosure?
A: It's The Law! As of January 1, 2011 a revised real estate licensees disclosure law went into effect in New York. As of 1/1/2011 the law requires real estate agents to have clients/customers sign a form stating that they understand whom the agent represents, and to whom the agent will give or won't give "undivided loyalty," when they enter into a relationship. It also covers advance dual agency disclosure.
The disclosure law is designed to clarify the roles of buyers and sellers agents, in order to help you make informed choices about your relationship with the real estate broker and its sales associates. There are multiple role's the buyer and seller agent can play.
MORE QUESTIONS?
Q: Are you a Client or Customer?
A: Only you can make that decision when purchasing or leasing real property.
Q: What is a Client?
A: Someone who is paying for a service and being represented as a Principle. Someone who has agency or a legally recognized relationship with the real estate broker and their agents.
Q: What representation do they get?
A: The Client/Principle gets six Fiduciary Duties.
1) Confidentiality
2) Undivided Loyalty
3) Reasonable Care
4) Obedience
5) Duty to Account
6) Full Disclosure
These duties are contained in the Code of Ethics for Realtors.
Q: What is a customer?
A: Someone who has no contractual relationship with the real estate broker or its agents. Someone who is not paying for a service.
Q: What representation does the customer get?
A: 1) They are entitled to fair and honest treatment.
2) Disclose known material facts.
Q: How do you want to be represented?
A: Client or Customer?
You must decide how you want to be represented in a real property transaction. If you don't understand the disclosure, please ask you real estate agent to clarify their role. Do not allow for SECRET AGENTS.
For any questions concerning New York State Agency Disclose Law. Please contact:
DEPARTMENT OF STATE
DEPARTMENT OF STATE
Division of Licensing Services
P.O. Box 22001Albany, NY 12201-2001
(518)-474-4429\
http://www.dos.state.ny.us/
If you found this subject to be boring? Please leave a comment on the blog.
Till next time
NY REAL ESTATE NURSE
Hey Bob:
ReplyDeleteGreat work! This blog is full of useful information the readers can use to their advantage. Some of your writing provides exactly what people need to know, but have absolutely no idea of the kind of loyalty that is owed to them by the agent, whether he or she represents the buyer or the seller you make it clear the Realtor is a great asset for the home buyer or seller.
Looking forward to your next blog.
Nelson Silverio
Hi Bob glad to be on board! looking forward to all the good info and advice!
ReplyDeleteRose, RN