Presentation for Risk Reduction with Agency issues, from Procuring Cause to representation.

1. The Power of A Relationship
Matthew Rathbun
ABR, ABRM, AHWD, ASR, CSP, e-PRO, GREEN, GRI, SFR, SRS, SRES
EarthCraft and Eco-Broker Certified
TheAgentTrainer.com

3. Clients Likelyhood To Be A Repeat Client
Don’t Know - 1%
Definitely Not -7%
Probably Not - 9% 1%
Probably - 19% 7% 9%
Definitely - 63%
19%
63%

4. Client Customer Designated
Dual Agency Limited Services Sub-Agent
Non-Client

5. Statutory Duties
Honesty
Disclosure
Obedience
Accounting
Loyalty
Reasonable
Care
Confidentiality

6. Opinion
Fact

7. Control Consult
Communicate

8. Agency Disclosure Revisited
Must be (one of the following)
Conspicuous
Printed in bold letters
All capital letters
Underlined
In a separate box
Dual Agency
Disclosed to ALL parties and agreed to in writing
Listing agreement does not cover the change

9. Divorcing the Commission

10. Negotiating the
Commission
• MLS Dictates
• MRIS Article IV, Section
15
• Code of Ethics
Considerations
• Arbitration
• Who Do You Work For?

11. Related 2008 DPOR Changes
18 VAC 135-20-180 c.5
amended to require principal
brokers to report all instances
where they believe that
escrow accounts are not being
properly maintained. (3 days)
18 VAC 135-20-280 (paragraph 2)
amended to require prior written
consent of the principal broker
for performing certain
commission based acts.

12. 18 VAC 135-20-160 Broker Oversight
Every place of business must have a
Supervising Broker.
Responsibility may ONLY be given to
another licensed broker.
Must oversee and approve all
contracts and agency agreements
Must provide training AND policies
on:
Escrow Handling
Fair Housing
Advertising

13. 18 VAC 135-20-160 Broker Oversight
Negotiating and drafting of contracts, leases and
brokerage agreements;
Use of unlicensed individuals;
Agency relationships;
Distribution of information on new or changed statutory
or regulatory requirements;
Disclosure of matters relating to the condition of the
property.
Such other matters as necessary to assure the
competence of licensees to comply with this chapter

14. 18 VAC 135-20-160 Broker Oversight
Supervising broker must undertake
reasonable steps to ensure compliance by all
licensees assigned to the branch office;
Supervising broker located more than 50
miles from the branch office must certify in
writing on a quarterly basis their supervision
efforts. Records to be kept for 3 years.

15. No Off-Site Agent Offices
•No place of business shall be
in a residence unless it is
separate and distinct from the
living quarters of the residence
and is accessible by the public.
18 VAC 135-20-160.

16. • Code of Ethics Consideration
▫ Article 1: Honesty
▫ SOP 1-13: Offers Not Confidential
 SOP 1-15: Disclose competing
offers and their authors
▫ Article 3: Variable Rate
Commissions must be disclosed
▫ Article 16: Prohibition to work
with another REALTORS client
 SOP 16-12: Agency Disclosures
no later than executing offer.

18. Disclosures
Imputed Knowledge
Imputed Notice
Material Facts Disclosure
Latent Facts Disclosure

19. Virginia’s Limited
Services
Every Agent Must: If Waived, Results in
Limited Representation:
• Perform to Agreements
• Promote Best Interests • Assist In Marketing
• Maintain Confidentiality • Assist in Drafting /
Negotiating
• Exercise Ordinary Care
• Account For All Money • Establish Strategies for
Accomplishing Objectives
• Disclose Material Facts
• Comply With All Laws • Reasonable Assistance to
Satisfy Contract Obligations
• Provide All Disclosure Docs

20. Required Disclosure Language
“By entering into this brokerage agreement, the
undersigned do hereby acknowledge their informed
consent to the limited service representation by the
licensee and do further acknowledge that neither the
other party to the transaction nor any real estate
licensee representing the other party is under any
legal obligation ot assist the undersigned with the
performance of any duties and responsibilities of the
undersigned not performed by the limited service
representative.”

21. Dangers of Dual in the Law
Hawkins A dual agent added an "as is" clause to the
purchase agreement without the buyer's consent. The
jury returned a $62,641 verdict.
Source: NAR 2009 Legal Scan

22. Dangers of Dual in the Law
• Jenkins The seller's agent, acting as an
undisclosed dual agent, executed a sales
agreement for the sellers that contained provisions
the sellers never agreed to, resulting in a $24,843
verdict.

23. Dangers of Dual in the Law
• Maali A dual agent arranged the sale of a gas station,
but the national franchisor refused to approve the
transfer of the franchise agreement to the buyer. The
agent's broker was found vicariously liable for the
agent's conduct; the jury awarded $149,000 in
compensatory damages and $50,000 in punitive
damages.

24. Dangers of Dual in the Law
• Martinez v. AFM Realtors of Am. The buyer wanted to
purchase an apartment complex that was not
subject to rent control, and the dual agent did not
tell him the property was subject to rent control.
The jury returned a $209,100 verdict.

25. Ralph Sampson wanted a pool...
The case settled for $450,000.
Source: NAR 2009 Legal Scan

26. Statutory Duties
Perception of Dual Agency
Honesty
Disclosure
Obedience
Accounting
Loyalty
Reasonable
Care
Confidentiality

27. A New Kind of Dual Agency
• Amador Zuazua vs. Tibbles
(Montana 2006)
• Upheld by Supreme Court
• 2 Buyers = Dual Agency

28. DPOR Responds
“Don't forget the problems caused by being a Dual
Agent. The difficulties associated with this
perfectly legal agency relationship seem to be on
the increase. Be very careful to communicate and
explain dual agency to prospects and clients and
avoid dual representation if at all possible.”
Schafer Oglesby, VREB Chairman
VREB Speaking – Winter 2006

29. VAR Responds
Dual Agency is ALWAYS a conflict of interest. Virginia
law merely permits you to engage in it with the informed
consent of the parties provided you act accordingly. Their
informed consent, once obtained, does not mean the
conflict ceases to exist, merely that the clients consent to
your acting as a dual agent notwithstanding the existence
of the conflict. This is an important point to remember:
the conflict does not go away just because you get the
requisite consent. You still must act in a manner
consistent with the conflicting interests of your clients.
Lem Marshall, VAR General Counsel
March/April 2004 issue of “Commonwealth” Magazine

30. NAR Responds
“Realizing that cooperation with other real estate
professionals promotes the best interests of those who
utilize their services, REALTORS ® urge exclusive
representation of clients; do not attempt to gain any
unfair advantage over their competitors; and they refrain
from making unsolicited comments about other
practitioners. In instances where their opinion is sought,
or where REALTORS® believe that comment is necessary,
their opinion is offered in an objective, professional
manner, uninfluenced by any personal motivation or
potential advantage or gain.”
Paragraph 5 of the Preamble to the Code of Ethics

31. Creation of Agency
Expressed Agency
Implied Agency
MLS Does Not Establish Agency!

32. Termination of Agency
Revocation
Renunciation
Death of Principal / Agent
Insanity
Bankruptcy
Illegal
Destruction
Expiration

33. Odds and Ends
Personal Presentations of Offers
Lockboxes
Limbo State of Transfers
“Can’t Reach the Seller’s Agent”
“The Buyer Called Me Directly…”
“Being Contacted for Different Service”
Presenting all offers

34. LIMITATIONS FOR LICENSEE LIABILITY
FALSE INFORMATION PROVIDED BY SELLER
REVEALING INFORMATION REQUIRED BY LAW
MISREPRESENTATION MADE BY SUB-AGENT
(UNLESS BROKER / LICENSEE SHOULD HAVE KNOWN)
NEGLIGENCE OR GROSS NEGLIGENCE OR INTENTIONAL
ACTS OF THE ASSISTING BROKER / SALESPERSON

35. • Potential Penalties of Agency Breach
• Forfeiture of Commission
• Actual damages
• Punitive damages
• Consequences for NAR Code of Ethics
• Loss of Real Estate License

36. Disclosure Documents
Regional Contract
Exclusive Right to Represent
Listing Agreement
Buyer Agency Agreement
VAR Disclosure of Brokerage Relationship
NVAR Disclosure of Brokerage Relationship

37. Record Keeping
To include time
Disclosures to place and date of
be kept for 3 disclosure even
years if unsigned or
oral

38. www.TheAgentTrainer.com
matthew@realtor.com
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Twitter.com/mattrathbun