Texas Real Estate Brokerage and Law of

Texas Real Estate Brokerage
and Law of Agency, 6th Edition
© 2015 OnCourse Learning
© 2015 OnCourse Learning
Agency Relationship
• Several alternatives to traditional seller
agency relationship presently utilized
– receiving increased interest and discussion
– NAR has even modified its Code of Ethics to
allow new forms of representation
– Licensees must take a new look at the way they
practice real estate
• particularly residential real estate.
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• Initial disclosure is still required at first
contact with a party
– at the time of the first substantive dialogue
• Substantive dialogue is defined as a meeting
or written communication that involves a
substantive discussion relating to specific
real property
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Disclosure Not Required
A licensee is not required to provide
this written information if:
• the proposed transaction for a residential
lease is not more than one year and no sale
is being considered; or
• the party is represented by another licensee
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The Next Disclosure
• The IAB must be given at the time of the
licensee’s first contact with:
– another party to the transaction or
– another licensee who represents another party
to the transaction.
• The disclosure may be oral or in writing.
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Exclusive Buyer/Tenant Agency
• Buyers and tenants have the same
opportunity for representation as the
– can freely disclose their needs
– ask for and receive information about market
conditions, and answers to specific questions
– from their agent, who has no conflicting fiduciary
duty to the seller
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Commercial Transactions
• Historically have never involved sub-agency
• One agent represents the seller/landlord,
the other represents the buyer/tenant
– The seller/landlord almost always paid the
– Courts have ruled that the money going to the
buyer/tenant agent, though paid by the
seller/landlord, was paid by buyer/tenant
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Residential Transactions
• Agency Policy of Listing Agents
– Agents should be sure sellers understand
advantages and disadvantages of dealing with a
buyer’s agent
– some prepared forms such as the TAR® MLS®
forms help
• Seller and agent should know immediately if
showing agent is a buyer agent.
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Initial Interview
• Many buyer’s brokers use a buyer
information checklist for the buyer to sign,
acknowledging that the buyer has received
all of this information.
– A sample buyer interview checklist is shown in
Figure 9-2 in the text
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Earning the Commitment
• A prudent agent should ultimately complete
the initial consultation by having the buyer(s)
execute a Buyer/Tenant Rep Agreement
• As a buyer’s broker, different skills are also
– Go over list on page 173 and 174 of the text
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Buyer’s Agent –Duties of CareWhat are They?
• Duties of care might be the same
(performance, accounting, reasonable care,
loyalty) but will follow the legal dictates of
the buyer
– Wyrick v. Tillman & Tillman Realty
• Inspectors – Let the buyer make the
decision as to whom to choose
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Agency Issues
Conflict with Buyers
Superfluous Contingencies
Disclosing Subagency
Disclosures to the Principal
Presenting Offers
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Additional Cases Regarding
Buyer’s Brokers
• Lee Hawkins Realty Inc. v. Moss
• Field v. Century 21 Klowden-Forness
• Brown v. Roth
• Wyrick v. Tillman & Tillman Realty
• Saiz v. Horne
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Single Agency
• When representing the Buyer
– Do not sign an agreement to be a buyer’s
representative until the buyer has seen and
rejected all of the in-house listings
– After the in-house listings have been rejected,
you are free to represent the buyer in acquiring
other properties
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Single Agency
• When representing the Seller
– Deal with all buyers as customers and retain
your status as an agent/ subagent for in-house
company listings
– Most serious conflicts occur when representing
the buyer, since the agent may have to withdraw
from the representation
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Dual Agency
• A broker must agree to act as an
intermediary if broker represents a
buyer/tenant and a seller/landlord
• What is the difference between an
intermediary who is not appointed to
represent the parties and a dual agent?
– As a practical matter, they are probably the
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Duties of Care
• A dual agent has an unusual (and not welldefined) standard of care
– How can you give 100 % of your loyalty to two
• In dual agency, you place yourself in the
position of representing potentially adverse
parties, and there are many possible
conflicts of interests
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Broker Acting as an Agent for
More Than One Party
Dismuke v. Edina Realty, Inc
Lewis v. Long & Foster
Coldwell Banker v. Camelback Office Park
Baldasarre v. Butler
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Broker Acting as an Agent for
More Than One Party
• Enright v. Jonassen
• Harry Brown v. F.S.R. Brokerage, Inc.
• Bazol v. Rhines
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Conflicts Regarding Sales Contracts
• How much earnest money?
• How many contingencies?
• How many and which addenda should be
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