Dual agency relationships
- Dual agency
relationships defined
(sec. 4735.70)
The bill
would define the following as dual agents:
(1) A licensee
who represents both the purchaser and the seller as clients
in the same real estate transaction;
(2) A brokerage
that represents both the purchaser and seller as clients
in the same real estate transaction;
(3) A management
level licensee who represents a client in an in-company
transaction.
- Dual
agency disclosures required
(sec. 4735.71)
Under the bill,
a dual agency relationship would be permitted in a real estate
transaction only where a licensee or brokerage makes specified
disclosures to a purchaser and seller in a dual agency disclosure
statement, and both parties have full knowledge of the dual
representation and consent
in writing to the representation on the dual agency disclosure
statement.
In addition
to other disclosures a licensee would be required to make
on the dual agency disclosure statement, the bill would require
the licensee, prior to obtaining the consent of any party
to a dual agency relationship, to disclose to both the purchaser
and seller all relevant information necessary to enable each
party to make an informed decision regarding the dual agency
relationship. The
bill also would require the licensee to inform those persons
of any material change in such information after consent is
obtained and to provide each person with an opportunity
to revoke his or her consent.
The brokerage would
be required to make the disclosure to the purchaser and seller
as soon as practicable after it is determined that a dual
agency relationship may exist and prior to the signing of
any offer to lease or purchase property.
Where the purchaser
and seller are represented by different nonmanagement licensees
affiliated in the same brokerage, the brokerage would not
be required to obtain the consent of the seller and the purchaser
on a dual agency disclosure statement, if (1) the licensee
made the required disclosures on an agency disclosure statement
and other specified disclosures required of a licensee, (2)
the potential for a dual agency was disclosed to all parties
in an agency disclosure statement, and (3) each party consents
by initialing, in a timely manner after it is determined that
a dual agency relationship exists, the appropriate section
on the agency disclosure statement previously provided to
the parties.
[This type of dual agency will
become known as split agency by the Ohio Association of Realtors.
— Editor]
The bill would
prohibit a brokerage from participating in a dual agency relationship
where a management level licensee represents a client in an
in-company transaction, unless the brokerage meets the following
conditions:
(1) The brokerage
has established a procedure pursuant to a provision of the
bill, under which licensees representing one client will not
have access to confidential information concerning another
client of the brokerage involved in the dual agency transaction;
(2) The licensee
who is an agent for a client in the dual agency relationship
fulfills the licensee’s duties exclusively to the licensee’s
client.
- Duties
of management level and affiliated licensees
(sec. 4735.72)
The bill would
also require the brokerage and management level licensees
in a brokerage to objectively supervise licensees and affiliated
licensees who represent both the purchaser and seller in a
transaction, and nonmanagement licensees affiliated with
the same brokerage representing separate clients in the same
transaction, to refrain from disclosing any confidential information
of a client to any party, client, or employee of the brokerage
and from allowing confidential information to be utilized
for the benefit of another client, and to refrain from
advocating on behalf of the purchaser or seller. Where
nonmanagement licensees affiliated in the same brokerage represent
different clients, the licensees would be required to serve
as the agent of only one party and fulfill the duties owed
that client according to the duties set forth in the bill.
The bill would
not prohibit a brokerage or management level licensees from
providing factual, nonconfidential information that suggests
objective options or assisting parties in an unbiased manner
to negotiate or fulfill the terms of a contract, provided
that confidential information of a client is not utilized
in formulating suggestions or providing assistance.
The bill specifies
that no cause of action would arise against a licensee in
a dual agency relationship for making disclosures authorized
or required under the bill’s provisions. The bill also
provides that making disclosures permitted under Chapter 4735.
would not terminate any agency relationship between a licensee
and a client.
Under the bill,
if a brokerage determines that confidential information
of a client in a dual agency relationship has become known
to any licensee employed by or affiliated with the brokerage
who represents another client in the dual relationship as
a result of the failure of the brokerage, its employees, or
licensees to maintain such confidentiality, the brokerage
would be required to notify both clients of the occurrence
immediately, and offer
to resign representation of both clients.
If either client accepts such resignation, the brokerage would
not be entitled to compensation from that client. If, however,
a client does not accept the resignation, the brokerage would
be permitted to continue the representation.
The bill would
prohibit a licensee who obtains confidential information concerning
another client of the brokerage in a dual agency relationship
from disclosing the information or using the information for
the benefit of the licensee’s client under any circumstances.
The bill also would permit a client to initiate a cause of
action for damages and rescission of an agency agreement against
a brokerage and any licensee who fails to comply with procedures
established by the brokerage, as required under the bill,
to ensure the protection of confidential information.
- Dual
agency disclosure statements
(sec. 4735.73)
The bill
would require the Superintendent of Real Estate, with the
approval of the Ohio Real Estate Commission, to establish
by rule the dual agency disclosure statement for the disclosure
of information specifying the
duties of a dual agent in a real estate transaction. The statement
would be required to be delivered to specified clients and
parties to a real estate transaction at specified times and
include the following information:
(1) Unless confidential,
the identity, including names and addresses of both
(2) A description
of the real property involved;
(3) That in serving
as a dual agent, licensees in the brokerage represent two
clients whose interests are, or at times could be, different
or adverse;
(4) That as a
result of the dual agency, the dual agent may not be able
to advocate on behalf of the client with the same skill and
energy the agent may have if the agent represents only one
client;
(5) A description
of the duties the brokerage and its affiliated licensees and
employees owe to each client, including the duty of confidentiality;
(6) That neither
the brokerage nor its affiliated licensees have any material
relationship with either client other than incidental to the
transaction, or if the brokerage or its affiliated licensees
have such a relationship, a disclosure of the nature of the
relationship. For purposes of this provision, “material
relationship” would mean any actually known personal,
familial, or business relationship between the brokerage or
an affiliated licensee and a client that could impair the
ability of the brokerage or affiliated licensee to exercise
lawful and independent judgment relative to another client.
(7) That
as a dual agent, the brokerage cannot engage in conduct that
is contrary to the interests or instructions of one party
or act
in a biased manner on behalf of one party;
(8) The source
of compensation to the real estate broker;
(9) That the
client does not have to consent to the dual agency relationship,
and the options available to the client for representation
in the transaction if the client does not consent including
the right of the client to terminate the agency relationship
and seek representation from another source.
(l0) That the
consent of the client has been given voluntarily, that the
signature indicates informed consent, and that the dual agency
disclosure statement has been read and understood.
Termination
of duties of licensee to client
(sec. 4735.74)
Under the bill,
unless otherwise agreed in writing, the duties of the licensee
would terminate upon the performance of all duties owed to
a client or after a contract expires. A licensee, however,
would be required to provide a client with an accounting of
all moneys and property relating to the transaction and keep
all information received during the course of the transaction
confidential, unless:
(1) The client
permits disclosure;
(2) Disclosure
is required by law or by court order;
(3) The information
becomes public from a source other than the licensee;
(4) The information
is necessary to prevent a crime the client intends to commit;
(5) Disclosure
is necessary to defend the brokerage or its licensees against
an accusation of wrongful conduct or to establish or defend
a claim that a commission is owed on a transaction.
Effective
date of bill
(Section 6)
Under the bill,
new sections governing agency relationships and duties of
real estate brokers and licensees would become effective six
months after the effective date of the bill. The six-month
effective date would not apply to provisions requiring the
Superintendent of Real Estate, with the approval of the Ohio
Real Estate Commission, to establish the agency and dual agency
disclosure statements.
HISTORY
ACTION
|
DATE
|
JOURNAL
ENTRY
|
| Introduced |
05-23-95 |
p.
809 |
| Reported,
H. Commerce & Labor |
11-14-95 |
P.
1720 |
| Passed
House (97-0) |
11-15-95 |
p.
1732 |
Reported,
S. Financial Institutions, Insurance & Commerce
|
----- |
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| H0354-RS.121/kmb |
|
|
House
Bill 354 is now the Law.
Don’t
Sign Away Your Right
To Guaranteed Full Representation.
Any
questions regarding the role or responsibility of real estate
brokers, brokerages, or agents in Ohio can be directed to
an attorney or
the Ohio Department of Commerce, Division of Real Estate &
Professional Licensing
(614) 466-4100 or Ohio
Division of Real Estate.
|
