Agency / Seller Agency / Buyer Agency / Dual Agency / Designated Agency / Transaction Licensee / Other Information about Real Estate Transactions / Disclosure of Business Relationships / Seller's Disclosure / Lead Paint Disclosure / Legal Counsel / Recovery Fund / Contracts / Zoning You should be aware that Pennsylvania law requires several disclosures be made to the consumer before entering into a Real Estate transaction. The best advice I can give you is to be patient and, if something seems unclear, speak up and ask for an explanation.
An agency relationship is created when one person represents the interests of another. Real Estate agents are licensed by the state to represent a person for the sale, purchase or lease of real property. The state law relating to agents, the Realtors Code of Ethics and general principles of agency law define the responsibilities of the Real Estate Agent.
Pennsylvania Law Requires Real Estate Brokers and Salespersons (Licensees) to advise consumers who are seeking to sell or purchase residential or commercial real estate, or tenants who are seeking to lease residential or commercial real estate where the licensee is working on behalf of the tenant, of the business relationships permitted by the real estate licensing and registration act. This notice must be provided to the consumer at the first contact where a substantive discussion about real estate occurs unless an oral disclosure has been previously provided. If the oral disclosure was provided, this notice must be provided at the first meeting or the first time a property is shown to the consumer by the broker or salesperson.
Before you disclose any information to a licensee, be advised that unless you select an agency relationship the licensee is not representing you. A business relationship of any kind should not be presumed but must be established between the consumer and the licensee.
The type of relationship formed between the agent and their client is called a fiduciary relationship. This relationship must be based on trust, and the agent owes the following duties to the client:
- Loyalty
- Diligence
- Confidentiality
- Obedience
- Disclosure
- Accounting
- Reasonable Care
Once a fiduciary relationship is established, the client can rely on their agent to put the client's interest before that of anyone else, including their agent's. The courts strictly enforce these duties and require that the Real Estate agent is fair and honest with all parties involved in the transaction.
Any licensee who provides you with real estate services owes you the following duties:
- Exercise reasonable professional skill and care which meets the practice standards required by the Real Estate Seller Disclosure Act.
- Deal honestly and in good faith.
- Present, in a reasonable practicable period of time, all offers, counteroffers, notices, and communications to and from the parties in writing. The duty to present written offers and counteroffers may be waived if the waiver is in writing.
- Comply with the Real Estate Seller Disclosure Act.
- Account for escrow and deposit funds.
- Disclose all conflicts of interests in a reasonable practicable period of time.
- Provide assistance with document preparation and advise the consumer regarding compliance with laws pertaining to real estate transactions.
- Advise the consumer to seek expert advice on matters about the transaction that are beyond the licensee's expertise.
- Keep the consume informed about the transaction and the tasks to be completed.
- Disclose financial interest in a service, such as financial, title transfer and preparation services, insurance, construction, repair or inspection, at the time service is recommended or the first time the licensee learns that the service will used.
Under the laws of Pennsylvania, a Real Estate licensee may have the following business (agency) relationships with a customer:
In a Seller Agency relationship, the licensee, upon entering into a written agreement, owes fiduciary duties only to a seller/landlord. The licensee must:
- place the seller's/landlord's best interest above anyone else in a Real Estate transaction.
- keep confidential all seller/landlord disclosures, except for any known material defects about the property.
- make a continuous and good faith effort to find a buyer for the property, except while the property is subject to an existing agreement.
- disclose to all other parties in the transaction that the licensee has been engaged as a Seller Agent.
A Seller Agent may compensate other brokers as subagents if the seller/landlord agrees in writing. Subagents have the same duties and obligations as the Seller Agent. (Although today, you will find subagency is less and less available.) A Seller Agent also may compensate a Buyer Agent and a Transaction licensee, both of which do not have the same duties and obligations as the Seller Agent.
In a Buyer Agency relationship, the licensee, upon entering into a written agreement, owes fiduciary duties only to a buyer/tenant. The licensee must:
- be loyal to the buyer/tenant and act in their best interests.
- keep confidential all buyer/tenant disclosures, except that a licensee is required to disclose known material defects about a property.
- make a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer/tenant is subject to an existing agreement.
- disclose to all other parties in the transaction that the licensee has been engaged as a Buyer Agent.
A Buyer Agent may be paid fees, which may include a percentage of the purchase price. And, even though paid by the seller/landlord, the Buyer Agent still represents the interests of the buyer/tenant.
Dual Agency exists when a Real Estate licensee is both the Seller Agent and the Buyer Agent in the same transaction. Dual Agency only can be created with the written consent of all parties. The Dual Agent owes the following duties to both parties:
- The agent can take no action that is adverse or detrimental to either party's interest in the transaction.
- The agent must make a continuous and good faith effort to find a buyer for their listed property, and a property for their buyer client, unless either is subject to an existing contract.
- The agent owes confidentiality to both parties, except that the licensee is required to disclose all known material defects about a property.
In Designated Agency, the employing broker may, with your consent, designate one or more licensees from the Real Estate company to represent you -- either as a Seller Agent or a Buyer Agent. Other licensees in the company may represent another party and shall not be provided with any of your confidential information. Designated Agents have the same duties as listed above under Seller Agency and Buyer Agency.
In Designated Agency, the employing broker will be a Dual Agent and have the additional duties of:
- taking reasonable care to protect any confidential information disclosed to the licensee.
- taking responsibility to direct and supervise the business activities of the licensees who represent the seller and buyer while taking no action that is adverse or detrimental to either party's interest in the transaction.
The designation may take place at the time that the parties enter into a written agreement, but may occur later. Regardless of when the designation takes place, the employing broker is responsible for ensuring that confidential information is not disclosed.
A Transaction Licensee is a broker or salesperson who provides communication or document preparation services or performs other acts for which a license is required WITHOUT being the agent or advocate for either the seller/landlord or the buyer/tenant. Upon signing a written agreement or disclosure statement, a Transaction Licensee has the additional duty of limited confidentiality in that the following information may not be disclosed:
- The seller/landlord will accept a price less that the asking/listing price.
- The buyer/tenant will pay a price greater than the price submitted in a written offer.
- The seller/landlord or buyer/tenant will agree to financing terms other than those offered.
Other information deemed confidential by the consumer shall not be provided to the Transaction Licensee.
Other Information about Real Estate Transactions:
Note that the following are negotiable with your licensee and shall be addressed in an agreement/disclosure statement:
- The duration of the employment, listing agreement or contract.
- Fees and commissions.
- The scope of activities or practices.
- The broker's cooperation with other brokers, including the sharing of fees.
Disclosure of Business Relationships:
In order to provide the Real Estate consumer with the highest level of service, Long & Foster Real Estate has business relationships with Prosperity Mortgage, Long & Foster Settlement Services, and Long & Foster Insurance Agency, Inc. I will gladly put you in contact with a representative from any of these companies. You are under no obligation, however, to use their services.
By law, the seller must provide the buyer with a written Seller Property Disclosure Statement prior to ratifying an Agreement of Sale.
Federal law requires that prior to ratifying an Agreement of Sale, a seller must provide a buyer with a disclosure about lead base paint if the property was built before 1978. To begin the disclosure process I will provide you with the pamphlet, "Protect Your Family from Lead in Your Home." As a buyer, if you would like a property tested for lead base paint, you will be given the opportunity to do so under the Agreement of Sale.
As always, you have the option to be represented by an attorney during your Real Estate transaction. If you decide to do so, you should introduce your attorney to me early on in the process so that we can work together.
The Pennsylvania legislature has established a Real Estate Recovery Fund to compensate persons who obtain a judgment because of fraud, misrepresentation or deceit by a Real Estate agent and are unable to collect the judgment after exhausting applicable remedies.
For further information regarding the fund, call the Pennsylvania Real Estate Commission at 717-783-3658.
Applicable laws and regulations do not fix most terms of Real Estate agency contracts. These terms (including the broker's commission, the scope of activities and practices, the broker's cooperation with other brokers, including the sharing of fees, and the time period of the contract) are set by negotiation between the parties.
Any agreement of sale must state the zoning classification of the property, except for single-family dwellings.
Site
Map:
|
John A. Benigno, ABR Long & Foster Real Estate, Inc. 355A Lancaster Ave Haverford, PA 19401-1554 Office Phone: 610-658-8900 Fax: 610-658-8901 Licensed in Pennsylvania |
|
The entire contents of this web site are copyrighted by John A. Benigno, ABR . All rights reserved. Unauthorized reproduction is strictly prohibited.
