Legally speaking: What should a buyer agent do when the seller calls?
On February 22, 2016
By Peg Ritenour, OAR Vice President of Legal Services/Administration
The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. The following addresses a situation when a seller reaches out to a buyer’s agent…
Q: I represent a buyer who is in contract to purchase a property that is listed with a minimum service broker. The seller has contacted me with several questions regarding title and closing issues and seeking other information. When I attempted to direct the seller back to his listing broker, he explained that in the listing agreement and Waiver of Duties Statement he signed, he waived the listing broker’s duty to answer questions regarding the steps necessary to fulfill the terms of the contract. Do I have to assist the seller? I’m worried that if I don’t, that I’m not acting in the buyer’s best interests to make sure the transaction closes. On the other hand, I’m worried that if I help the seller, this conduct could imply that I am also the seller’s agent. I don’t want to create a dual agency relationship — I just want to represent my buyer without creating any problems.
A: The scenario you describe may sound like a Catch-22, but fortunately there are several provisions in the license law that provide guidance on your situation.
First, under Ohio license law a broker who is not going to provide certain services to a client must have that client sign the Waiver of Duties Statement approved by the Ohio Real Estate Commission. On this form, it clearly states above the seller’s signature line:
“By signing below, I agree that the real estate licensee who represents me will not perform the duties that are initialed above. I also understand that in any proposed real estate transaction, no other real estate licensee is required to perform the waived duties unless I subsequently hire them to do so, and realize that I may need to hire other professionals such as an attorney.” (emphasis added)
Therefore, the fact that the seller waived his listing broker’s obligation to help him fulfill the terms of the purchase contract, does not require you to provide these services. As to your concerns that by assisting the seller you may be creating an unintended agency relationship, Ohio Revised Code Section 4735.69 provides guidance. It states that a licensee may assist a party who is not the licensee’s client by providing information regarding lenders, inspectors, attorneys, insurance agents, surveyors, draftspersons, architects, and other similar information, and doing so does not create or imply any agency relationship with that party. Further, it states that providing this type of assistance to the other party is not a breach of any duty to your actual client.
Thus, while not required to do so, a buyer’s agent can provide basic information to the seller without implying an agency relationship with the seller or breaching any duty to the buyer. If you are considering providing such information to the seller in an effort to facilitate the closing of the transaction, I would discuss the matter with your buyer first. If your buyer agrees, I would make it clear to the seller that you are not his agent, can provide only limited information to him, and represent only the interests of the buyer. It is important not to go beyond providing limited information to the seller; if you provide assistance that goes beyond providing such basic information it is possible that your conduct could be construed as implying an agency relationship with the seller, thereby creating an unintended dual agency.
It is also important to understand that Ohio license law only permits a licensee to negotiate with a seller who is subject to a written exclusive agency contract with another broker if that broker gives written consent. Such consent is usually indicated in the MLS listing information. Therefore, it is important to check the MLS or contact the listing agent for written consent before you engage in any conduct with the seller that constitutes “negotiations.” For a definition of what constitutes negotiations, click here. If the seller in this situation is merely seeking information from you and no negotiations are involved, you may still want to consider contacting the listing broker to notify him that his seller has contacted you, confirm with him what the seller has told you regarding the waived duties, and obtain his consent to you providing such information to the seller. This will avoid any claim that you somehow interfered with his agency relationship with his client.
In conclusion, to avoid acting as a dual agent, here are some steps you may want to take when faced with this situation:
- When contacted by a seller, try to refer him back to his own agent, manager, or broker.
- If that is unsuccessful, call the listing agent to let him know the seller contacted you and try to get him to provide this information or assistance to the seller. If he tells you the seller waived his duty to perform this service, ask for written permission for you to do so. This can be as simple as an email. If that’s not possible, put a note in your file. Of course if you are going to engage in negotiations, the listing broker’s written consent is required.
- Talk with your buyers before providing information to the seller to make sure they are OK with you providing the seller with information.
- If you and the buyer agree that you will provide information to the seller, clarify with the seller that you are not his agent and therefore cannot provide him with any advice, advocate his position, maintain any confidential information he tells you, or disclose any confidential information concerning the buyer. Instead, make it clear you only represent the interests of the buyer. Confirm that in writing with him (an email is fine), or at least put a note in your file regarding this conversation.
- Hold your ground. Don’t let the seller draw you into crossing the line and engaging in behavior that could imply an agency relationship with him or breach your duties to the buyer. If the seller needs more than basic information, refer him to an attorney.
For more information on minimum service brokerage agreements and the Waiver of Duties Statement, including an FAQ, click here.
Tags: legal, Legally Speaking