Chapter 12 Seller Agency Duties and Disclosures

A sample dual representation paragraph in a listing agreement might read as follows:

- "By checking 'yes' and initialing below, the seller acknowledges and agrees the designated agent or (licensee) may undertake a dual representation for the sale or lease of property - So remember that on the listing agreements there are sections that need to be signed if a dual agency relationship is established

If both parties in a transaction have licensees representing them, there may not be a total "victory" of one client over the other, but rather there would be a:

- "Meeting of the minds" in which both parties would feel that the negotiations led to a win win situation

The dual agency confirmation must state, at a minimum, the following:

- "The undersigned confirm that they have previously consented to (insert name), ("licensee), acting as a dual agent in providing brokerage services on their behalf and specifically consent to the licensee acting as a dual agent in regard to the transaction referred to in this document

The written disclosure that a licensee gives to a seller can be included in:

- A brokerage agreement or it could be a separate agreement

A client is entitled to:

- A lot more information than a customer ever would be allowed to receive

There are times when obedience may be undesirable for example:

- A seller may tell a licensee that she does not want a sign in the yard, if the managing broker decides to go through with this listing then the licensee cannot put a sign in the yard

According to Illinois Law, a licensee acting in a dual agency capacity in a transaction MUST OBTAIN:

- A written confirmation from the licensees clients of their prior consent for the licensee to act as a dual agent in the transaction - This confirmation should be obtained at the time the clients are executing any offer or contract to purchase or lease in a transaction in which the licensee is acting as a dual agent

When must a licensee give a client a agency disclosure notice:

- According to Illinois law, no later than beginning to work as a designated agent on the consumers behalf-in other words, before the seller signs the listing agreement or showing property to a buyer client

The second duty to protect the client is:

- Accounting. Part of this is about knowing where the earnest money check is at all times and knowing when it should be deposited

Better communication with the client will be more likely to-

- Acquire a satisfied client

Care, which is the 1st duty of action also includes:

- Adequate protection of files on the property - Knowing where the key to the property is at all times and being willing to change the locks if the key suddenly disappears - It even includes going back through the home after the buyers walk outside to make sure no window latches were left undone

This unit discusses about:

- Agency disclosure as it applies to a seller and the duties that a licensee has to his or her seller clients

In instances where the licensee is representing a buyer, and the seller is the customer, then:

- All buyer information is confidential and the seller should not be given

Remember confidentiality is the ONLY fiduciary duty that continues:

- Beyond the agency relationship, unless a client gives a licensee permission to share with others

Under the paragraph of the dual agency question on a listing agreement has a place for the seller to:

- Check yes or no and then sign his or her initials

When acting as a dual agent a licensee CANNOT disclose to clients:

- Confidential information that the licensee may know about a client, without the clients permission - The price or terms the seller or the landlord will take other then the listing price without permission of the seller or the landlord - The price or terms the buyer or tenant is willing to pay without permission of the buyer or tenant - A recommended or suggested price or terms that the buyer should offer and a landlord will accept, without their permission

Confidentiality is the only:

- Fiduciary Duty that continues beyond the agency relationship, UNLESS a client gives a licensee permission to share the information with others

Duties of action are also called:

- Fiduciary duties of action because something must be done by the licensee to accomplish these 3 tasks

Licensees need to be skilled in the art of answering questions without:

- Giving away the sellers secrets - For example, what would the licensee say when the buyer asks, "why is he selling?" The wrong answer would be "because he needs the money." The right answer would be "He wants to move somewhere else."

Another part of accounting is that the listing company should take steps to know who:

- Has been on the property so that if something should disappear during a showing, the agent who showed the home has some hopes of solving the problem

Before a licensee signs a listing agreement with a seller:

- He or she must give the seller a agency disclosure

A licensee should also park in the street instead of the driveway if:

- His or her car leaks oil

The 2nd action duty is Obedience:

- If a seller asks the licensee to do something that is a violation of the law, for example, the seller says he or she doesn't want to sell to a certain race, then a licensee needs to cut off that relationship

A licensee who thinks that he or she knows better about what should be done than the client is:

- Ignoring the concept of accounting - Keep in mind that the client has opinions and viewpoints that need to be considered when the broker is attempting to reach a desirable conclusion for the client.

The written confirmation of dual agency can be:

- Included in another document, such as a contract to purchase

Also under the 1st action Duty of Care the licensee should take steps to:

- Insure the clients property is taken care of and protected

The third duty of protection is:

- Loyalty. Licensees at the listing company should keep the negotiating position of the seller as primary

The licensee must perform CAL or confidentiality, accounting, and loyalty to:

- Protect the client - The 3 fiduciary duties of protection are more defensive in nature than the three duties of action

Statutory duties are designed to:

- Put the clients needs above the desires of the managing brokers and their affiliated licensees

The duty of confidentiality will cause the licensee to:

- Respond to questions from the buyer-customer in a manner that will keep the buyer interested in the property without giving away facts that might cause the buyer to gain to much information that would be detrimental to the seller-client

A copy of the disclosure that a licensee gives a seller is retained by the:

- Sponsoring broker for the licensee

In Illinois, a designated agency is:

- Standard, so unless there is a written agreement stating otherwise, the relationship the licensee has with the seller is as a designated agent

According to Illinois law, no later than beginning to work as a designated agent on the consumers behalf a licensee must inform the consumer IN WRITING of the following:

- That a designated agency relationship exists, unless there is a written agreement between the sponsoring broker and the consumer stating a different brokerage relationship exists - The name or names of his or her designated agent or agents

The 3rd action Duty is disclosure. The licensee who turned a potential seller into a client should share:

- The CMA or comparative market analysis of the current market value of that property - The licensee should also share his or her evaluation of any market trends that would affect the seller, such as a nearby area being zoned commercial or a large employer in town who is planning to shutdown

Disclosure to a client is more complete than to a customer:

- The buyer customer gets information about the property but not about the seller

The duties of protection are designed to keep:

- The client protected from the information-seeking of the other party to the transaction - Also involves the licensee carrying information back to the client much as a spy would do, while in the presence of a customer, the licensee will collect secret information about the customer which will be used against the customer as the transaction progresses

A consumer who becomes a client will receive services that:

- The licensee cannot legally provide to a consumer, such as advice, opinions, and advocacy during negotiations

The 1st action Duty is Care:

- The licensee must take care of his client by attempting to obtain the best possible transaction for the client even if the broker receives nothing as a commission

If a buyer-customer tells the listing agent that she would be willing to pay $20,000 more for the property if necessary. This would be information that:

- The licensee would share with the seller/client as soon as possible - The client would benefit from this protection by knowing that the agent is keeping secrets from the customer

A listing agreement itself also advises the seller about:

- The possibility of a dual agency situation arising during the listing period

The seller would also know that the licensee will be keeping a good accounting concerning:

- The property, earnest money, and showings

When a licensee meets a potential seller, then at this point:

- The seller is a consumer

What does it mean when a client checks "yes" to the dual representation paragraph of the listing agreement?

- The seller is acknowledging that the possibility of dual agency exists and that he or she has read the paragraph and understands what it means

The seller will be in a much stronger position during a transaction than a consumer will be because:

- The seller will have a professional who will offer his or her skills throughout the selling cycle

In this unit we will jump ahead and assume that the seller is ready:

- To sign a listing agreement with the licensee

When acting as a dual agent a licensee CAN do for clients:

- Treat all clients honestly - Provide information about the property to the buyer or tenant - Disclose all latent material defects in the property that are known to the licensee - Disclose financial qualification of the buyer or tenant to the seller or landlord - Explain real estate terms - Help the buyer or tenant to arrange for property inspections - Explain closing costs and procedures - Help the buyer compare financing alternatives - Provide information on comparable properties

Sometimes a licensee representing a seller gets info about a buyer customer that can be shared. For example,

- When a buyer customer spends time viewing a home with the agent representing the seller, that customer may inadvertently give away information about how high a price he or she could offer. Once a licensee learns this information, he or she can pass it on to the seller as soon as is practical

A licensee may even reveal information regarding negotiating plans to a client:

- Where this would never happen with a customer

Even though the seller has checked "Yes" to the dual representation paragraph of the listing agreement, the licensee must still get the:

- Written consent from ALL parties to the transaction at the time a offer is made for the property by the buyer

The 3 duties of actions require the licensee to:

1. Care 2. Obedience 3. Disclosure - COD

The licensees duties to his or her client come in 2 categories which are:

1. Duties of Action 2. Duties of Protection - All 6 of these duties are designed to protect the client

What are the three duties of protection:

CAL - Confidentiality - Accounting - Loyalty

The 3 Fiduciary duties of protection also have a acronym:

CAL 1. Confidentiality 2. Accounting 3. Loyalty

What are the three duties of action:

COD - Care - Obedience - Disclosure