- As a prelude to reading this article, I would suggest that the reader should read "What's In A Name"
, and What Is Buyer Agency?"
. What I would like to focus on in this article is Dual Agent, Designated Agent, and Broker's Agent. Each of these titles is defined in the License Law of New York State and on the Agency Disclosure form required by Section 443 of that Law.
• Dual Agent: (Must be in writing). If the broker is representing only one party in the transaction, seller or buyer, landlord or tenant, the broker is acting as a Single Agent. If the broker is representing both parties in the transaction, then Dual Agency is required. Who pays the broker's commission does not determine which party the broker is representing. The broker may be compensated by either party or both parties. The law requires knowledge and consent to dual compensation by both parties.
• Designated Agency: This is a situation whereby the broker acts as a Dual Agent of the buyer and seller, landlord and tenant, and the broker designates one of his/her agents, (associate broker or licensed salesperson), to represent the seller or landlord and another to represent the buyer or tenant.
• Broker's Agents: The broker who has a listing agreement with the seller engages the cooperation of other brokers, either as buyer's agents or sub-agents of the seller or agents of the listing broker. The essential difference between the cooperating brokers acting as sub-agents of the seller or agents of the listing broker is that the latter relieves the seller of vicarious liability for the cooperating broker's actions.
The real estate licensee is required by Section 443 to inform and explain the meanings of these agency relationships "at the point of first substantive contact" when dealing with sellers, buyers, landlords, tenants and have the respective parties sign the Agency Disclosure Form indicating that they have given their "informed consent" to the agency relationships. The law applies to residential properties of one to four units as well as condominiums and cooperatives regardless of the number of units.
The disclosure requirements must be met whenever the agency relationships change. Advance consent to Dual Agency, (which must be in writing), is permitted under clearly described circumstance by the statute and Department of State Regulation.
The key phrase is "informed consent." Signed forms do not, in and of themselves, constitute compliance with the law. A common complaint among agents is that the requirement that real estate agent present and explain the form at the point of "first substantive contact" alienates the customer, even though the law is intended to protect the interests of the consumer. The courts and the Department of State will not be persuaded by this argument. Real estate agents have been penalized and commissions lost due to non-compliance with the law.
Issues relating to Agency Disclosure are among the greatest number of complaints brought to the attention of the Department of State by members of the public.
: John will be teaching a 22.5 hours Real Estate Continuing Education classes at Long Island University in Riverhead on December 12, December 14, and December 16. For information and registration contact Rosemary Malone at 631-287-8334 or by email at email@example.com.
John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com