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How It Works in Florida
Under the old rules, REALTOR® participating in a Multiple Listing Service always represented the seller unless a written agreement existed to the contrary. This, in spite of the fact most buyers believed they were working with “their agent” and “their agent” owed them loyalty, confidentiality and all the normal fiduciary duties. Some real estate attorneys described this situation as “agency by surprise”.
In 1992, brokers and agents around the country suddenly started to pay attention to representation issues for two reasons. The first reason was due to one of the large private firms in Minnesota being sued in a class-action lawsuit involving the practice of “undisclosed dual agency” in hundreds of transactions. This made national news in the real estate industry and was a very serious matter. If the firm lost the lawsuit, the penalties could be a severe as having to return all the commissions they collected from all of the customers in the lawsuit, and possibly more. This sort of talk gets a real estate agent’s attention.
The other event, which woke up real estate salespeople to agency issues, was when states began to re-examine agency disclosure laws. The growing national interest in buyer representation, along with the class-action lawsuit and national press coverage, made it a good time to examine disclosure laws. Generally, REALTORS® were required to disclose in writing on all listing agreement forms whether they represented the interest of the buyer or seller. However, most consumers were not given the information they needed to make an informed decision.
In Florida, at one time, common practice was for an all real estate professionals involved in the transaction to represent the seller. The listing broker established an agency relationship with the seller and typically granted sub-agency status to the sales people in the firm and to cooperating brokers. These laws have changed.
The Brokerage Relationship Disclosure Act became effective October 1, 1997. Its purpose is to eliminate consumer confusion regarding agency representation by regulating the roles of the buyers, sellers, and real estate agents involved in a real estate transaction. It revoked the practice of disclosed dual agency and allowed Florida licensees to operate as single agents, transaction brokers or non-representatives.
It applies only to residential sales, identified as:
a. Improved residential property of 4 units or less;
b. Unimproved residential property of 4 units or less;
c. Agricultural property of 10 acres or less
Disclosure
In the past, it was up to the homebuyer to inquire about the types of relationship they could have with a broker and what each meant. Most states recognized this was silly. How could the unsophisticated consumer be knowledgeable in real estate agency when most brokers were not? Most states eventually shifted the obligation to the broker, and when you first meet with them, you are to be informed about those different relationships.
Agency disclosure laws in Florida are designed to protect consumers by requiring real estate agents to inform them at first contract if they are acting as an agent for another party involved in the transaction. After the consumer has been informed that the REALTOR® has an allegiance to another party, the law assumes that the informed consumer can protect their own best interest. The objective of these laws is to make possible a fair and equitable real estate transaction for all parties involved.
You need to be awake. If your agent fails to inform you of your choices, or attempts to choose for you, they may be doing you a disservice. You should not only know your choices, but you should have a REALTOR® willing to discuss them with you.
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