(A) A real estate brokerage firm that provides services through an agency agreement for a client is bound by the duties of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting as set forth in this chapter. The following are the permissible brokerage relationships a real estate brokerage firm may establish:
(1) seller agency;
(2) buyer agency;
(3) disclosed dual agency;
(4) designated agency; or
(5) transaction brokerage.
(B) The broker-in-charge of a real estate brokerage firm shall adopt a written company policy that identifies and describes the types of real estate brokerage relationships in which associated licensees may engage, including teams and limited function referral offices. The written policy must include:
(1) the real estate brokerage firm's policy regarding cooperation with transaction brokers, or both buyer agents, and transaction brokers, and whether the broker offers compensation to these licensees;
(2) the scope of services provided to the real estate brokerage firm's clients;
(3) the scope of services provided to the real estate brokerage firm's customers;
(4) when and how associated licensees shall explain and disclose their brokerage relationships with an interested party to a potential transaction. The explanation and disclosure shall always comply with the minimum requirements set forth in this chapter;
(5) when and how an associated licensee shall explain the potential for the licensee to later act as a disclosed dual agent, designated agent, or transaction broker in specific transactions, as permitted by this chapter; and
(6) the real estate brokerage firm's policy on compliance with state and federal fair housing laws.
(C)(1) On reaching a written agency agreement to provide brokerage services for a seller of real estate, a seller's agent shall:
(a) perform the terms of the written brokerage agreement made with the seller;
(b) pursuant to subsection (A), promote the interest of the seller by performing agency duties which include:
(i) seeking a sale at the price and terms stated in the brokerage agreement or at a price and terms acceptable to the seller, except that the real estate brokerage firm is not obligated to seek additional offers to purchase unless the brokerage agreement provides otherwise while the property is subject to a contract of sale;
(ii) presenting in a timely manner all written offers and counteroffers to and from the seller, even when the property is subject to a contract of sale;
(iii) disclosing to the seller all material adverse facts concerning the transaction which are actually known to the seller's agent except as directed otherwise in this section;
(iv) advising the seller to obtain expert advice on matters that are beyond the expertise of the licensee; and
(v) accounting in a timely manner, as required by this chapter, for all money and property received in which the seller has or may have an interest;
(c) exercise reasonable skill and care in discharging the licensee's agency duties;
(d) comply with all provisions of this chapter and with regulations adopted by the commission;
(e) comply with all applicable federal, state, or local laws, rules, regulations, and ordinances related to real estate brokerage, including laws which relate to fair housing and civil rights;
(f) preserve confidential information provided by the seller during the course of and following the agency relationship that might have a negative impact on the seller's real estate activity unless:
(i) the seller to whom the confidential information pertains grants written consent to disclose the information;
(ii) disclosure is required by law; or
(iii) disclosure is necessary to defend the licensee against an accusation of wrongful conduct; or
(iv) the information becomes public from a source other than the broker.
(2) No cause of action may arise against a licensee for disclosing confidential information in compliance with item (1)(f).
(D) A licensee acting as a seller's agent may offer alternative properties to prospective buyers. A licensee acting as a seller's agent also may list for sale competing properties.
(E)(1) On reaching a written agency agreement to provide brokerage services to a potential buyer of real estate, a buyer's agent shall:
(a) perform the terms of the written brokerage agreement made with the buyer;
(b) in accordance with subsection (A), promote the interest of the buyer by performing the buyer's agent's duties which include:
(i) seeking the type of property at the price and terms stated in the brokerage agreement or at a price and terms acceptable to the buyer, except that the licensee is not obligated to seek additional properties unless the brokerage agreement provides otherwise for a buyer once the buyer becomes a party to a contract of sale;
(ii) presenting in a timely manner all written offers and counteroffers to and from the buyer;
(iii) disclosing to the buyer all material adverse facts concerning the transaction which are actually known to the licensee except as directed otherwise in this section. Nothing in this chapter may limit a buyer's obligation to inspect the physical condition of the property which the buyer may purchase;
(iv) advising the buyer to obtain expert advice on material matters that are beyond the expertise of the licensee; and
(v) accounting in a timely manner, as required by this chapter, for all money and property received in which the buyer has or may have an interest;
(c) exercising reasonable skill and care in discharging the buyer's agent's agency duties;
(d) complying with all provisions of this chapter and with regulations promulgated by the commission;
(e) complying with all applicable federal, state, or local laws, rules, regulations, and ordinances related to real estate brokerage, including laws which relate to fair housing and civil rights;
(f) preserving confidential information provided by the buyer during the course of or following the agency relationship that might have a negative impact on the buyer's real estate activity unless:
(i) the buyer to whom the confidential information pertains, grants written consent to disclose the information;
(ii) disclosure is required by law;
(iii) disclosure is necessary to defend the licensee against an accusation of wrongful conduct in a proceeding before the commission or before a professional association or professional standards committee; or
(iv) the information becomes public from a source other than the licensee.
(2) No cause of action may arise against a licensee for disclosing confidential information in compliance with item (1)(f).
(F) A licensee acting as a buyer's agent may offer properties which interest his buyer client to other potential buyers. However, if the licensee has two competing buyer clients in a single real estate transaction, the agent will give written notice to each buyer client that neither will receive the confidential information of the other.
(G)(1) A licensee shall treat all parties honestly and may not knowingly give them false or misleading information about the condition of the property which is known to the licensee. A licensee is not obligated to discover latent defects or to advise parties on matters outside the scope of the licensee's real estate expertise. Notwithstanding another provision of law, no cause of action may be brought against a licensee who has truthfully disclosed to a buyer a known material defect.
(2) No cause of action may be brought against a real estate brokerage firm or licensee by a party for information contained in reports or opinions prepared by an engineer, land surveyor, geologist, wood destroying organism control expert, termite inspector, mortgage broker, home inspector, or other home inspection expert, or other similar reports.
(3) A licensee, the real estate brokerage firm, and the broker-in-charge are not liable to a party for providing the party with false or misleading information if that information was provided to the licensee by the client or customer and the licensee did not know the information was false or incomplete.
(H) Nothing in this chapter limits the obligation of the buyer to inspect the physical condition of the property.
(I)(1) A real estate brokerage firm may act as a disclosed dual agent only with the prior informed and written consent of all parties. Consent is presumed to be informed if a party signs a completed copy of a dual agency agreement, promulgated by the commission. At the latest, the form must be signed by the buyer before writing an offer and by the seller before signing the sales contract. The agreement must specify the transaction, and must name the parties to the dual agency consent agreement, and must state that:
(a) in acting as a dual agent, the real estate brokerage firm represents clients whose interests may be adverse and that agency duties are limited;
(b) the associated licensees of the real estate brokerage firm may disclose information gained from one party to another party if the information is relevant to the transaction, except if the information concerns:
(i) the willingness or ability of a seller to accept less than the asking price;
(ii) the willingness or ability of a buyer to pay more than the offered price;
(iii) any confidential negotiating strategy not disclosed in an offer as terms of a sale; or
(iv) the motivation of a seller for selling property or the motivation of a buyer for buying property;
(c) that the clients may choose to consent to the disclosed dual agency or may reject it; and
(d) that the clients have read and understood the dual agency agreement and acknowledge that their consent to dual agency is voluntary.
(2) A broker-in-charge and associated licensees in one office of a real estate brokerage firm may conduct business with a client of another office of the real estate brokerage firm as a customer or client without creating a dual agency relationship, so long as the branch offices each have a separate broker-in-charge and do not share the same associated licensees.
(J)(1) A broker-in-charge may assign, through the adoption of a company policy, different licensees affiliated with the broker-in-charge as designated agents to exclusively represent different clients in the same transaction. A company policy adopted to fulfill the requirements of this subsection must contain provisions reasonably calculated to ensure each client is represented in accordance with the requirements of this chapter.
(2) A broker-in-charge may personally, or through the broker's duly authorized real estate licensed representative, specifically designate one or more associated licensees who will be acting as agent of the buyer client or seller client to the exclusion of all other associated licensees. Buyers and sellers shall give informed consent to enter into designated agency relationships. The informed consent must be evidenced by a designated agency agreement promulgated by the commission, and must be signed by the buyer before writing the offer and by the seller before signing the sales agreement. The designated agency agreement must include language informing the buyer and seller of the obligations of the broker-in-charge and associated licensees under this section.
(3) If a buyer client of a real estate brokerage firm wants to view a property that was personally listed by the broker-in-charge, the real estate brokerage firm shall act as a dual agent with the written consent of the buyer and seller, as required by subsection (I). If a seller client of a real estate brokerage firm wants to sell a property to a buyer client of the real estate brokerage firm that is personally represented by the broker-in-charge, the real estate brokerage firm shall act as a dual agent with the written consent of the buyer and seller, as required by subsection (I).
(4) A designated agent of a seller client has the duties and obligations set forth in subsections (C) through (E). A designated agent of a buyer client has the duties and obligations set forth in subsections (E), (G), and (H).
(5) In a transaction where both buyer and seller are represented by designated agents, the broker-in-charge shall act as a dual agent pursuant to subsection (I). The broker-in-charge is not required to complete a dual agency agreement under this provision. Consent must be contained in the designated agency agreement.
(6) A designated agent may disclose to the designated agent's broker-in-charge, or the licensed representative appointed by the broker-in-charge, confidential information of a client for the purpose of seeking advice or assistance for the benefit of the client in regard to a transaction.
(7) If a buyer client of a real estate brokerage firm wants to view and make an offer to purchase a property owned by a seller client being represented by the same associated licensee, the real estate brokerage firm must act as a dual agent with the written consent of the buyer and seller, as required by subsection (I).
(8) If a broker-in-charge appoints different associated licensees as designated agents in accordance with subsection (J)(1), the broker-in-charge, all remaining affiliated licensees, and the real estate brokerage firm must be considered to be dual agents.
(9) There may be no imputation of knowledge or information between and among the broker-in-charge, agents, and the clients. Designated agents may not disclose, except to the designated agent's broker-in-charge or appointed representative, information made confidential by written request or instruction of the client whom the designated agent is representing, except information allowed to be disclosed by this section or required to be disclosed by this section. Unless required to be disclosed by law, the broker-in-charge of a designated agent may not reveal confidential information received from either the designated agent or the client with whom the designated agent is working. For the purposes of this section, confidential information is information the disclosure of which has not been consented to by the client and that could harm the negotiating position of the client.
(10) The designation of one or more of a broker-in-charge's associated licensees as designated agents does not permit the disclosure by the broker-in-charge or associated licensees of information made confidential by an express written request or instruction by a party before or after the creation of the designated agency. The broker-in-charge and associated licensees shall continue to maintain this confidential information unless the party from whom the confidential information was obtained permits its disclosure by written agreement or disclosure is required by law. No liability is created as a result of a broker-in-charge's and associated licensee's compliance with this subsection.
(K) A licensee who represents one party to a real estate transaction may provide assistance to other parties to the transaction by performing ministerial acts such as writing and conveying offers, and providing information and aid concerning other professional services not related to the real estate brokerage services being performed for a client. Performing ministerial acts does not create an agency relationship.
(L)(1) A real estate brokerage firm may offer transaction brokerage to potential buyers and sellers. A transaction broker may be a single agent of a party in a transaction, giving the other party customer service or the transaction broker may facilitate the transaction without representing either party.
(2) Licensees operating as transaction brokers are required to disclose to buyers and sellers their role and duties in offering customer services to the consumer that shall include the following:
(a) honesty and fair dealing;
(b) accounting for all funds;
(c) using skill, care and diligence in the transaction;
(d) disclosing material adverse facts that affect the transaction, or the value or condition of the real property and that are not readily ascertainable;
(e) promptly presenting all written offers and counteroffers;
(f) limited confidentiality, unless waived in writing by a party. This limited confidentiality prohibits disclosing:
(i) information concerning a buyer's motivation to buy or the buyer's willingness to make a higher offer than the price submitted in a written offer;
(ii) factors motivating a seller to sell or the seller's willingness to accept an offer less than the list price;
(iii) that a seller or buyer will agree to financing terms other than those offered; and
(iv) information requested by a party to remain confidential, except information required by law to be disclosed;
(g) additional duties that are entered into by separate agreement.
(3) Prospective buyers and sellers who do not choose to establish an agency relationship with a real estate brokerage firm but who use the services of the firm are considered customers. A licensee may offer the following services to a customer as a single agent or as a transaction broker including, but not limited to:
(a) identifying and showing property for sale, lease, or exchange;
(b) providing real estate statistics and information on property;
(c) providing preprinted real estate forms, contracts, leases, and related exhibits and addenda;
(d) acting as a scribe in the preparation of real estate forms, contracts, leases, and related exhibits and addenda;
(e) providing a list of architects, engineers, surveyors, inspectors, lenders, insurance agents, attorneys, and other professionals; and
(f) identifying schools, shopping facilities, places of worship, and other similar facilities on behalf of the parties in a real estate transaction.
(4) A licensee offering services to a customer shall:
(a) timely present all written offers to and from the parties involving the sale, lease, and exchange of property, even when the property is subject to a contract of sale;
(b) timely account for all money and property received by the broker on behalf of a party in a real estate transaction;
(c) provide a meaningful explanation of brokerage relationships in real estate transactions;
(d) provide an explanation of the scope of services to be provided by the licensee;
(e) be fair and honest and provide accurate information in all dealings;
(f) keep information confidential as requested in writing by the customer; and
(g) disclose known material facts regarding the property or the transaction.
(M) The provisions of this section which are inconsistent with applicable principles of common law supersede the common law, and the common law may be used to aid in interpreting or clarifying the duties described in this section. Except as otherwise stated, nothing in the section precludes an injured party from bringing a cause of action against licensees, their companies, or their brokers-in-charge.
HISTORY: 1997 Act No. 24, Section 1; 2004 Act No. 218, Sections 13 to 17; formerly 1976 Code Section 40-57-137; 2016 Act No. 170 (S.1013), Section 1, eff January 1, 2017.
Effect of Amendment
2016 Act No. 170, Section 1, rewrote the section.