Q. Should a buyer’s agent be checking permits for their clients?
No. A buyer’s agent’s job is to ensure that their client’s interests are best served throughout the transaction. While this may include advising the client regarding potential issues with outstanding permits or unpermitted work on the property, the agent should not be the one researching this issue. Our recommendation is that REALTORS® always be the source of the source. A buyer’s agent should be advising their clients to inquire about any work that was done on the property that may have required permits and assisting the client with obtaining additional information regarding those permits. This may even include accompanying the client to the building department to obtain this information, which allows the buyer to receive the desired information directly. If an agent were to obtain the information themselves and then share it with their buyer client, there is the potential for liability if the information they share with their client is incorrect or incomplete. By having the buyer receive the information directly, they are limiting their exposure to this type of liability.
Q. Can a buyer switch agents to submit an offer on a home they were shown by another agent?
Maybe. If the buyer entered into an exclusive representation agreement with the first agent, they are bound by the terms of that contract unless the first broker is willing to release them from that contract. If approached by a prospective buyer client, a REALTOR® has an affirmative obligation to make reasonable efforts to determine whether the prospective client is subject to an exclusive representation agreement with another broker. Failing to ask this question may result in a violation of Article 16 of the Code of Ethics. Further, REALTORS® should not be contacting other brokers to request that they release a buyer from an exclusive representation agreement.
If the buyer is not subject to an exclusive representation agreement, they are free to switch brokers; however, this situation may present a question of procuring cause if the property they purchase was initially introduced to them by the first agent. While the so-called “threshold rule” does not singularly determine procuring cause, the agent who first introduced the buyer to the property is one of many factors considered. A buyer agent who finds themselves as the second broker working with a buyer in their home search should strongly consider entering into an exclusive representation agreement with that buyer to protect the broker’s interest in being compensated for the work they do on behalf of that buyer.
Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel.
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