Waiver of Duties Law

Minimum Services law effective October 2006

Waiver of Duties Law

by Lorie Garland
Assistant Vice President
Legal Services

Last month’s OHIO REALTOR reviewed the changes to the license law brought about by House Bill 150 which becomes effective in October 2006. This month’s article provides FAQs regarding these changes. More information on the new “Waiver of Duties Statement” required by HB 150 will be addressed in this article.

Q. What is the effective date of HB 150?

A. HB 150 becomes effective on Oct. 9, 2006.

Q. HB 150 permits a licensee’s client to waive specific duties the licensee owes the client. Can a licensee obtain a client’s waiver of the fiduciary duties owed the client?

A. No. Ohio Revised Code 4735.62 lists the fiduciary duties a licensee owes his seller or buyer client. Ohio Revised Code 4735.621(A) provides that those fiduciary duties may not be waived by a client.

Q. What are the fiduciary duties a licensee owes his client?

A. The fiduciary duties listed in Ohio Revised Code 4735.62 are the following:

  • Exercising reasonable skill and care in representing the client and carrying out the responsibilities of the agency relationship;
  • Performing the terms of any written agency agreement;
  • Following any lawful instructions of the client;
  • Performing all duties specified in this chapter in a manner that is loyal to the interest of the client;
  • Complying with all requirements of this chapter and other applicable statutes, rules, and regulations, including the Ohio fair housing law, division (H) of section 4112.02 of the Revised Code and the federal fair housing law, 42 U.S.C.A. 3601;
  • Disclosing to the client any material facts of the transaction of which the licensee is aware or should be aware in the exercise of reasonable skill and care and that are not confidential information pursuant to a current or prior agency or dual agency relationship;
  • Advising the client to obtain expert advice related to material matters when necessary or appropriate;
  • Accounting in a timely manner for all moneys and property received in which the client has or may have an interest;
  • Keeping confidential all confidential information, unless the licensee is permitted to disclose the information pursuant to division (B) of section 4735.74 of the Revised Code. This requirement includes not disclosing confidential information to any licensee who is not an agent of the client.

Q. What are the duties of a licensee that can be waived by a client?

A. HB 150 provides specific duties that a licensee owes a seller or buyer client. These specific duties can be waived. Ohio Revised Code 4735.63 lists the specific duties a licensee owes a seller client. Those duties include the following:

  • Seek a purchase offer at a price and with terms acceptable to the seller. Unless the seller so directs, the licensee is not obligated to seek additional offers if the property is subject to a contract of sale, lease, or letter of intent to lease;
  • Accept delivery of and present any purchase offer to the seller in a timely manner, even if the property is subject to a contract of sale, lease, or letter of intent to lease;
  • Within the scope of knowledge required for licensure, answer the seller’s questions and provide information to the seller regarding any offers or counteroffers;
  • Assist the seller in developing, communicating, and presenting offers or counteroffers;
  • Within the scope of knowledge required for licensure, answer the seller’s questions regarding the steps the seller must take to fulfill the terms of any contract.

Ohio Revised Code 4735.65 lists the specific duties a licensee owes a buyer client. Those duties include the following:

  • Seek a property at a price and with purchase or lease terms acceptable to the purchaser. Unless the client so directs, the licensee is not obligated to seek additional purchase or lease possibilities if the purchaser is a party to a contract to purchase property, or has entered into a lease or has extended a letter of intent to lease;
  • Within the scope of knowledge required for licensure, answer the purchaser’s questions and provide information to the purchaser regarding any offers or counteroffers;
  • Assist the purchaser in developing, communicating, and presenting offers or counteroffers;
  • Present any offer to purchase or lease to the seller or the seller’s agent in a timely manner, even if the property is subject to a contract of sale, lease, or letter of intent to lease, and accept delivery of and present any counteroffers to the purchaser in a timely manner;
  • Within the scope of knowledge required for licensure, answer the purchaser’s questions regarding the steps the purchaser must take to fulfill the terms of any contract.

Q. How does a licensee obtain a client’s waiver of a specific duty(s)?

A. HB 150 provides that a licensee must perform the duties required under Ohio Revised Code Sections 4735.63 or 4735.64 unless the client agrees to waive these duties by signing a waiver of duties statement. The Division of Real Estate and Professional Licensing is required to adopt this new waiver of duties statement. A licensee will be required to use this new state form if a client is waiving a duty(s) listed in Ohio Revised Code Sections 4735.63 or 4735.64. The new “Waiver of Duties Statement” is in the process of being formally adopted. Next month’s OHIO REALTOR will provide additional information on this new state form.

Q. Does HB 150 effect the license law prohibition of negotiating directly with a seller or buyer under a written exclusive agency agreement with another broker?

A. HB 150 makes an exception to the prohibition of negotiating directly with another broker’s client. The exception applies if that broker has given written authorization to negotiate directly with his client. This exception is provided in Ohio Revised Code 4735.75.

Q. How does a buyer’s agent obtain the listing broker’s written authorization to negotiate directly with the seller?

A. The broker’s written authorization could be provided in an e-mail, letter, print advertising or through the MLS.

Q. If a buyer’s agent is given written authorization from the listing broker to negotiate directly with the seller what does that authorize the buyer’s agent to do?

A. HB 150 provides that “negotiate” means any of the following:

  • Delivering or communicating any offer, counteroffer or proposal;
  • Discussing or reviewing the terms of any offer, counteroffer or proposal;
  • Facilitating communication regarding an offer, counteroffer, or proposal and preparing any response as directed.

Q. If a buyer’s agent, after obtaining written authorization from the listing broker, negotiates directly with the seller could an implied agency relationship exist between the seller and the buyer’s agent?

A. No. Ohio Revised Code 4735.75 specifically provides that negotiations conducted by a licensee pursuant to the exclusive broker’s authorization will not create or imply an agency relationship between the licensee and that broker’s client.

Q. If it is noted in the MLS to deliver any offer directly to the seller can a buyer’s agent prepare a counteroffer pursuant to the seller’s request?

A. Delivering an offer and preparing a counteroffer are activities that fall within the license law definition of “negotiate.” A buyer’s agent can only perform negotiation activities directly with the seller if the listing broker has provided written authorization to conduct that activity. In the situation you describe the listing broker has only provided written authorization to deliver the offer but not to prepare a counteroffer. Therefore the buyer’s agent should not prepare the counteroffer for the seller unless such negotiation is specifically authorized by the listing broker.

Q. Can a listed property be advertised by the listing broker as a “for sale by owner”?

A. Ohio Revised Code 4735.16(B)(2) prohibits a broker who is representing a seller under an exclusive right to sell listing agreement from advertising the property as a “for sale by owner” or otherwise mislead the public to believe that the seller is not represented by a broker.