As discussed at the Legal Luncheon, there are a few things that have us scratching our head about our “known’ practice on agency disclosures.
Commercial Issue: First, in December of 2018, the case of Michael Thomann v. Board of Registration of Real Estate Brokers and Salesmen found a licensed real estate broker in violation of 2 items, one of which was “Failing to provide a proper notice of agency disclosure to the seller.” What makes this decision interesting is that the broker was acting on behalf of a commercial seller at the time. Previously, we’ve been taught that there is no agency disclosure required for commercial transactions. Instructor and commercial real estate expert (and member of the Board of Registration that helped craft agency laws) Rob Nahigian had stated, “if someone told you that they researched and do not see anything in the regs that says commercial is exempt, they would be correct. We went silent on the regs and just didn’t address commercial but its understood that agency disclosure was targeted to residential.”
Absence an exclusion in the regs and with this new court ruling, it would be wise for all Realtors to provide the state mandated disclosure form for ALL property types, including commercial now.
Public Media Comment: Recently an article in Inman News entitled, “Redfin’s new agent-free service hits a snag” talked about a new business model and asked the Board of Registration for a comment. While it’s hard for us to obtain legal interpretation from the Board on behalf of licensed brokers, it was surprising to see they did respond to the media…
In this case, the brokerage has created a system where buyers fill out an extensive form online “offer form” that provides market information that may impact how buyers choose to tailor their terms. According to Inman, this form helps buyers craft their offer will information such as “pointing out that 71 percent of recent Boston-area Redfin client offers included an inspection contingency, 87 percent included a financing contingency, and Boston listings on average sell for less than 1 percent off the listing price.”
The problem noted by the Board of Registration is that it isn’t until the last screen that buyers are told that the form doesn’t create an agency relationship or that the brokerage represents the seller. The buyers click an “I understand’ button before sending the offer. The state licensing board said in the Inman article that this would be in violation of our agency laws.
Clearly, we’ve been talking about how technology is changing the ‘first personal meeting’ being face-to-face, but now officially first meetings may be interrupted as virtual meetings as well. It would be wise that before you provide substantive services to anyone, you share who you are working for via an agency disclosure form – whether in person or virtually.