Maryland commercial agency course

1. MREC Agency- Commercial Westfield North Building, 2730 University Blvd, Ste. 200, Wheaton, Maryland 20902 301-949-1771 (Phone) 301-949-5441 (Fax) www.pditraining.net Presents: By D. Scott Smith, CCIM 443.691.8153 [email_address]

5. MREC Agency- Commercial DISCLOSURE: I am not an attorney. This class was written by attorneys, directors, and agents for and by the Maryland Real Estate Commission and in conjunction with Maryland DLLR. Should you have questions outside the scope of this class, please seek your own professional legal council.

6. MREC Agency- Commercial PART 1. Intro, Common Law, Creation & Compensation

11. MREC Agency- Commercial PART 2. Duties to Principal

19. MREC Agency- Commercial PART 3. Sub-Agent , Disclosed Dual,Undisclosed Dual

21. MREC Agency- Commercial PART 3. Sub-Agent C. Duties of Sub-agent owed to whom? 1. The primary agent- who is also the broker of the sub-agent. 2. The principal (client-seller, purchaser, or both- if disclosed dual. D. Types of sub-agents 1. Associates in brokers office. a) Usually two clients, the broker and owner or property listed or, in purchaser, a prospective buyer or lessee of property.

22. MREC Agency- Commercial PART 3. Sub-Agent D. Types of sub-agents –cont. 2. Sellers Agent / Cooperating agent. a) Usually have three clients: broker, listing broker and owner of property OR in buyer agency a prospective buyer or lessee of property.

24. MREC Agency- Commercial PART 3. Disclosed Dual Agency Refer. Part 3- 529 COMAR. B. Permitted Under Real Estate Law, IF: 1. Disclosed to all parties AND 2. Consent to by all parties with informed consent. 3. Necessity for each broker to have a policy regarding in-house sale and possible dual agency.

26. MREC Agency- Commercial PART 3. Und isclosed Dual Agency C. How undisclosed dual agencies are created. 1. Purchasing property listed by broker 2. Accepting future employment 3. Representing the buyer-while seeking compensation from the seller without FIRST disclaiming any sub-agency. 4. Leading buyer to believe agent is representing buyer, while legally acting as the agent for seller.

27. MREC Agency- Commercial PART 3. Und isclosed Dual Agency-cont. 5. Working for buyer rather than with the buyer. 6. Implied from conduct and words spoken. a) Examples: “I’ll take care of everything”, “Let’s offer a lower offer and see how it goes”, “Trust me, the seller won’t counter” “we” & “us” – Buyer / “them” & “they” –Seller and Listing Agent Calling buyer “client” to 3 rd person

28. MREC Agency- Commercial PART 3. Und isclosed Dual Agency-cont. CAVEAT: A real estate broker working with a buyer doesn’t automatically become the buyers agent. Courts understand that brokers routinely provide buyers with other valuable services and information as a byproduct of brokers marketing function for seller.

29. MREC Agency- Commercial PART 3. Und isclosed Dual Agency-cont. You can without creating an agency relationship: 1. Show buyer listed property that fit buyers criteria 2. Describe amenities and attributes and make 3. Factual representation about condition and status 4. Transmit offers made by buyer to seller or listing broker on a timely basis.

30. MREC Agency- Commercial PART 3. Und isclosed Dual Agency-cont. Providing services like these to buyer does not in itself, create an agency relationship with buyer. When a broker does more than provide market information or facilitates the completion of a transaction, and instead becomes and advocate and negotiator for the buyer, then broker most likely has crated an implied agency with buyer. This can result in an undisclosed dual agency if broker is also the agent of the seller by reason of a listing agreement, or a sub-agency agreement, or a sub-agent based upon an offer of sub-agency from the listing broker that was NOT rejected.

31. MREC Agency- Commercial PART 3. Und isclosed Dual Agency-cont. When acting as the agent of the seller while working with the buyer, do not lead buyer or seller to believe you are acting as buyers advocate in negotiations with seller.

33. MREC Agency- Commercial Part 4 Remedies of Breach

35. MREC Agency- Commercial Part 4 Remedies of Breach B. Rescission 1. Only principal can rescind. Legal remedy through court attempts to restore parties to original status before transaction occurred. Buyer deeds property back to seller. Seller refunds purchase price. 2. A tainted transaction by agents breach is presumed to be unfair and a principal is able to rescind transaction without showing transaction was in fact, unfair in price or terms and that agent acted in bad faith

36. MREC Agency- Commercial Part 4 Remedies of Breach B. Rescission 3. In undisclosed dual agency, if intentional or not, either the buyer or the seller need only to establish the existence of undisclosed dual agency to qualify for the rescission. (OOUCH!!!)

37. MREC Agency- Commercial Part 4 Remedies of Breach C. Forfeiture of Commission 1. An agent who breaches their fiduciary duty while procuring a transaction for a principal is deemed to have breached the implied terms and conditions of their employment. Duties are imposed by implication upon agreement in addition to any express obligation set forth in an employment agreement. An agent who breaches their duties in not entitled to be paid and can be compelled to return any compensation received, including brokerage commission.

39. MREC Agency- Commercial Part 4 Remedies of Breach E. Loss of License 1. Real estate license laws prohibit licensees from acting as undisclosed dual agents and many other forms of conduct that could constitute breach of licensee’s fiduciary duties to principal. Violators of said laws put their license in jeopardy.

40. MREC Agency- Commercial Part 5 Obligations

41. MREC Agency- Commercial Part 5 Obligations To Non-Principals A. Duty of Fairness B. Duty of Disclosure of Material Facts C. Duty of Honesty

43. MREC Agency- Commercial Part 5 Obligations D. Liability to NON-Principals Cont. 4. Person to whom falsities were made not only relied upon the statements but did so in the full belief that statement made was true. 5. If falsities were not made the individual would not had acted in the same manor. 6. Person relied upon false statements suffered actual damages resulted from the making of false statement.

47. MREC Agency- Commercial Part 5 Obligations E. Obligation of principal to agent a) Availability b) Accuracy of information c) Reimbursement

48. MREC Agency- Commercial Part 6 Termination

50. MREC Agency- Commercial The information provided in this course outline is intended to reflect a summary of the subject matter required to be taught, as of August 2011, in a course approved by the Maryland Real Estate Commission. While the Maryland Real Estate Commission has made every attempt to ensure the accuracy, completeness, and timeliness of this course outline, the Maryland Real Estate Commission makes no guarantee or warranty, either expressed or implied, concerning the accuracy, completeness, or timeliness of the content of this course outline. The Maryland Real Estate Commission assumes no responsibility for use of, or reliance on, this course outline by the public or licensees of the MREC, in no event, shall be liable for any direct, indirect, incidental, special, exemplary, or consequential damages arising in any way from the use of this course outline. Course requirements, as reflected in this course outline, may change from time to time to reflect changes in Maryland real estate law and regulations. This course outline does not replace or amend any requirements of Maryland Real estate law and regulation.

51. MREC Agency- Commercial Conclusion Case Law ~ Real Estate Law ~ Common Law Q & A

52. Westfield North Building, 2730 University Blvd, Ste. 200, Wheaton, Maryland 20902 301-949-1771 (Phone) 301-949-5441 (Fax) www.pditraining.net We Thank You and hope to see you again! By D. Scott Smith, CCIM 443.691.8153 [email_address]