3. Law of Agency 2: Disclosure and Listing Forms

Question 1

Regulation 175.7 of NY Codes, Rules, and Regulations

Answer 1

= Disclosure of compensation
- Limits compensation from more than one party in a transaction except when full disclosure & consent is granted by all parties
- Requires agent to make clear for which party he is acting

Question 2

Article 12 - A Section 443

Answer 2

= requirement for agency to disclose
- if client refuses to sign the agent makes written declaration of the facts of the refusal and must maintain a copy for not less than 3 years
- copy for client must be provided

Question 3

Agency Disclosure

Answer 3

• law ($12, 443), failure can result in civil lawsuit, suspension, fines, loss of licensure - ensures that customers are not taken advantage of and have informed consent of judiciary duties owed to them

Question 4

Broker Protection Clause

Answer 4

• entitles broker to commission under certain circumstances - - e.g. if buyer is someone the broker negotiated with during listing term)

Question 5

Consensual Dual Agency

Answer 5

• disclosure of dual agency has been made and parties have agreed in writing to the dual agency relationship

Question 6

Undisclosed agency

Answer 6

• seller and buyer are represented by same person without disclosure, unethical

Question 7

Brokerage Agreements

Answer 7

=employment contracts between client and broker (not seller)
- creates agency
- either listing agreement or buyer agreement
- must have definite termination date, can not be automatically renewed

Question 8

Listing agreement

Answer 8

= written contract between broker and seller
- must have definite termination date, can not be automatically renewed
- must explain difference between exclusive right to sell and exclusive agency
- 3 Types: 1. Exclusive agency, 2. Exclusive right to sell, 3. Open listing/non exclusive

Question 9

Types of listing agreements:

Answer 9

1. Exclusive agency: broker gets exclusive right to representation but seller can find buyer themselves =, broker only gets commission if they procured sale (compare to exclusive right to sell)
2. Exclusive right to sell: broker is entitled to commission
3. Open listing/non exclusive = listing open to multiple brokers, only broker who sells gets commission
4. Net listing agreements not permitted in nyc

Question 10

Buyer- Broker agreement

Answer 10

= written contract between buyer and broker
- should include compensation, duration, duties of the buyers broker
- 3 types: 1.Exclusive Agency Buyer Agency Agreement, 2. Exclusive Buyer- Agency Agreement, 3. Open Buyer- Agency Agreement/non exclusive

Question 11

Types of Buyer -Broker agreement

Answer 11

1. Exclusive Agency Buyer Agency Agreement: broker gets commission when they successfully find property which results in a transfer of sale (exception buyer finds property)
2. Exclusive Buyer- Agency Agreement: broker gets commission regardless of who finds property
3. Open Buyer- Agency Agreement/non exclusive : buyer offers opportunity to find house to all, broker who finds it gets commission

Question 12

Disclosure form

Answer 12

• Section 443
• advises clients of their rights and representation received if they chose to form and agency relationship, helps consumers make informed decisions
• required for all residential real property transactions (multi family buildings, condos, coop apts) except commercial and vacant land
• relationship based not transactional based (=not on a particular transaction)
• is only a disclosure form NOT a contract and so does NOT create agency relationship
• broker must hold on to it for 3 years
• agent can obtain advance informed consent to dual agency

Question 13

Timing of disclosure

Answer 13

• Should be made at first Substantive Contact
• must be made before broker enters into exclusive agreement of representation
• before the client begins to share confidential information
• Tele conference: if first meeting is by phone, verbal disclaimers will be sufficient but follow up with disclosure documents asap
• Virtually! Disclosure forms can be sent electronically for a client to review prior to meeting