Disclosure of Brokerage Relationships – Continued

Changes in Agency Relationship

HB 1907 also requires that if after the initial written Disclosure is given the Agency relationship changes between the Licensee and Client or Customer, then the Licensee must Disclose such material changes in writing to all Clients and Customers already involved in the transaction, and receive written consent.  Be sure to remember that any changes in the Agency relationship, as suggested above, triggers re-disclosure.

Dual & Designated Standard Agents & Representatives

We’ve discussed in great detail the Duties and responsibilities of Licensees regarding Dual and Designated Licensee relationships, as well as defined the difference between Agency and non-Agency.  Now let’s discuss how that information pertains to our requirements under Disclosure.

Disclosed Dual Standard Agency (§ 54.1-2139.)

The provisions of HB 1907 continues to permit Disclosed Dual Agency, formerly known as dual representative, as specifically authorized by Virginia Code § 54.1-2139.  However, a Licensee may not act as a Dual Standard Agent unless the Licensee has first given written Disclosure of the consequences of such Dual Standard Agency and obtained the written consent of all parties to the transaction prior to the commencement.

Additionally Dual Standard Agency Disclosure shall contain the following provisions:

  • That following the commencement of Dual Standard Agency, the Licensee cannot advise either party as to the terms to offer or accept in any offer or counteroffer; however, the Licensee may have advised one party as to such terms prior to the commencement of Dual Agency;
  • That the Licensee cannot advise the Buyer Client as to the suitability of the property, its condition (other than to make any Disclosures as required by law), and cannot advise either party as to what repairs of the property to make or request;
  • That the Licensee cannot advise either party in any dispute that arises relating to the transaction;
  • That Licensee may be acting without knowledge of the Client’s needs, Client’s knowledge of the market, or Client’s capabilities in dealing with the intricacies of real estate transactions; and
  • That either party may engage another Licensee at additional cost to represent their respective interests.

However, per Subsection B of Virginia Code § 54.1-2139, such disclosures shall not be deemed to comply with the requirements defined above if

  • Not signed by the client or
  • Given in a purchase agreement, lease or any other document related to a transaction.

Other Dual Standard Agency Provisions:

If a Licensee is currently representing a party as an Standard Agent and that party desires to engage in a real estate transaction with another current Client represented by the Licensee as a Standard Agent, the Licensee may engage in Dual Standard Agency provided that prior to commencement of such Dual Standard Agency the required written and consented Disclosure requirements are met.

Further, if the licensee represents one party as an independent contractor and another party as a standard agent, the licensee may engage in dual representation only if the disclosure in Subsection B is given.

Existing Client disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure shall be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box.

Even if the disclosure is executed by the clients, a separate written brokerage agreement still must be signed by the clients.

No cause of action shall arise against a dual standard agent for making disclosures of brokerage relationships as provided by this article. A dual standard agent does not terminate any brokerage relationship by the making of any such allowed or required disclosures of dual standard agency.

A licensee may withdraw, without liability, from representing a client who refuses to consent to a disclosed dual agency or dual representative thereby terminating the brokerage relationship with such client.  Such withdrawal shall not prejudice the ability of the licensee to continue to represent the other client in the transaction nor to limit the licensee from representing the client who refused the dual agency/dual representation in other transactions not involving dual agency/dual representation.

Failure to use Disclosure forms which do no comply with changes from HB 1907 could lead to civil liability and/or a VREB violation.

Disclosed Designated Standard Agency (§ 54.1-2139.1.)

The provisions of HB 1907 also permit Disclosed Designated Standard Agency, formerly designated representative, as specifically authorized by Virginia Code § 54.1-2139.1.  Designated Standard Agents are defined and authorized by Virginia Code § 54.1-2139.3.  A Principal or Supervising Broker may assign different Licensees affiliated with the Broker as a Designated Standard Agent to represent different Clients in the same transaction to the exclusion of all other Licensees in the firm.

Other Designated Standard Agency Provisions:

  • Use of such Designated Standard Agents shall not constitute Dual Agency if a Designated Agent is not representing more than one Client in a particular real estate transaction.  However, the Principal or Broker supervising the transaction is considered a Dual Agent.
  • Designated Standard Agents may not disclose, except to the affiliated Licensee’s Broker, personal or financial information received from the Clients during the Brokerage relationship and any other information that the Client requests during the Brokerage relationship be kept confidential, unless otherwise provided for by law or the Client consents in writing to the release of such information.
  • Designated agents must be disclosed in a real estate transaction.

Designated Standard Agency Disclosures may be given in combination with other disclosures or provided with other information, but if so, the disclosure shall be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box.

Additional points on dual agency:

  • If a licensee represents one party as an independent contractor and another party as an agent, separate written disclosures are required.
  • Even if the disclosure is executed by the clients, a separate written brokerage agreement still must be signed by the clients.

Limited Service Agency Disclosure Requirements

An LSA has obligations set out in the brokerage agreement, but LSA must also provide the client, at the time of entering the brokerage agreement, copies of all disclosures required by federal or state law, or local disclosures expressly authorized by state law.

Specifically an LSA must Disclose to the client in writing:

  • Clients rights & obligations under the Residential Property Disclosure Act (§ 55-517);
  • If condo, Client’s obligation to deliver to Buyer, or to receive as Buyer, a condo resale certificate; and
  • If property subject to a Property Owners’ Association, Clients obligation to deliver to Buyer, or to receive as Buyer, the Association Disclosure packet.

 

Author: Lee Gosselin, Associate Broker & Owner

 

 

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