Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 23, 1995 TAG: 9505060006
SECTION: AMERICAN HOME WEEK PAGE: 2 EDITION: NEW RIVER VALLEY
SOURCE:
DATELINE: RICHMOND LENGTH: Medium
Entitled "The Duties of Real Estate Brokers and Salesperson," the bill was drafted over a two-year period by a Virginia Association of REALTORS task force, and sponsored in the General Assembly by Delegate Eric Cantor, R-Henrico County, and Senator Elliott Schewel, D-Lynchburg.
A few technical amendments suggested by Governor George Allen were adopted at the reconvened session on April 5, and the final bill should be signed into law soon. It will go into effect on October 1.
"Passage of this bill reflects what is already taking place in the real estate market," commented 1995 VAR President Tom Innes, "and for many agents, the basic practice of real estate will not change. The plus for consumers is that it provides for a more informed choice to be made by the home buying and selling public."
The legislation creates a new section under the real estate licensing law, combining existing Real Estate Board regulations, common law principles and marketplace common sense. It protects both the public and the profession by clarifying who represents whom in any given transaction, how they are to be notified, and what they are required to do for their clients and customers. The basic duties of standard agents are spelled out in detail, while separate sections address the duties of licensees representing sellers, buyers, landlords or tenants.
"This law outlines the basic legal responsibilities of real estate professionals working with clients in various brokerage relationships," explained John G. "Chip" Dicks, VAR legislative counsel and member of the VAR agency task force. "It's a matter of choice for the consumer whether to work with a standard agent, dual agent, or buyer's agent whose duties are now spelled out in the law, or even to agree on brokerage duties by special contract. With consumers now being fully aware of their choices, they can make informed decisions."
The new law provides guidelines for how two salespersons working in the same firm can fully represent the different sides of a transaction as "standard agents." This should be a benefit to consumers because, under existing rules, if both agents work for the same firm they technically must be treated as dual agents which can limit service to customers. Now, a supervising broker can designate one salesperson to represent a seller and another to represent a buyer, enabling the firm to more effectively give their clients full representation. The supervising broker in the firm, however, still has responsibilities as a dual agent.
The new law lists the duties of dual agents, who can represent both sides of a transaction if both grant written consent. Dual agents are limited in the level of service they can provide, because they must look out for the interests of both parties. In recent years several court cases have focused on the practice of dual agency.
The law also allows for an independent contractor relationship, with only those duties spelled out in the written agreement. For example, the contract can limit the duties of the real estate broker to solely a marketing function without so-called "agency duties." This relationship is likely to be most common in commercial transaction.
Other important features of the bill include:
A requirement that agents be truthful to all parties and disclose adverse material facts about the physical condition of a property of which they are aware.
A requirement that agency relationships be disclosed as soon as "substantive discussions" take place, and those agency relationships may change only with the consent of all parties.
A limit on vicarious liability. Clients are only responsible for the misdeeds or misstatements of an agent if the client knew or should have known about it.
Likewise, agents are only responsible for the misdeeds or misstatements of subagents if they knew or should have known about them, and failed to act.
A clear statement that the new law does not supersede the Fair Housing Act. In these cases, strict standards of mutual responsibility will remain in effect.
Elimination of the presumption of an agency relationship based on participation in a multiple listing service.
With this new legislation, the real estate profession will now be governed by statute instead of court cases which may conflict with other court cases and applicable regulations. Enforcement will continue to be handled by the courts and the Real Estate Board, which will amend its regulations to conform to the law by October.
Keywords:
GENERAL ASSEMBLY 1995
by CNB