IV. AGENCY/BROKERAGE (8 ITEMS) Flashcards
Disclosure
Senate Bill 489 requires a license holder to give Information About Brokerage Services (disclosure
of agency) to a prospect at the first substantive dialogue. This includes a FACE-TO-FACE meeting
where substantive discussion of real estate takes place, a phone conversation, or any mailing (paper
or email) with a substantial amount of information about a particular property. Exceptions include
Open Houses, when meeting with a party represented by another license holder, or when the proposed
transaction is for a residential lease for not more than one year, and no sale is being considered.
The TREC Information About Brokerage Services (IABS) form is used to make this disclosure. The
IABS is presented before you have been hired, therefore, before you have a client.
Senate Bill 489 requires a license holder representing a party to disclose this representation at first
contact with another party or license holder. Oral or written disclosure is allowed. Disclosure of
representation happens after you have been hired by a buyer, seller, landlord or tenant.
Intermediary Practice
Senate Bill 489 allows a broker to act as an intermediary in a transaction where he represents both
the seller and the buyer and has the written permission of both parties including how the broker
will be paid.
Only a broker can be an Intermediary. Statutory Intermediary takes precedence over
common law dual agency.
A broker who agrees to represent both the buyer and the seller MUST do so as an Intermediary.
As an Intermediary it would be appropriate for a broker to appoint associates to work with the parties
to the transaction.
A broker who works alone or who only sponsors 1 license holder must be an Intermediary without
appointments.
An appointed associate, under an Intermediary, may give advice and/or opinions to one party in a
transaction.
A broker may never give advice and/or opinions to either party. He may only disclose
facts about the property.
Duties to Client – including minimum service
The license act requires a broker to provide a minimum level of service to a client.
A broker who represents a party or who lists real property under an exclusive agreement must:
* put the interests of the client above all others, including the broker’s own interests;
* inform the client of material information about the property or the transaction received by the
broker;
* answer the client’s questions and present any offer to or counteroffer from the client;
* treat all parties to a real estate transaction honestly and fairly.
A license holder may advertise another broker’s listing with the written permission of that broker.
A license holder may use photos of a property from another broker’s expired listing with written
permission.
A broker may refer clients to a Residential Service Company with whom he has a professional connection
as long as the broker discloses the connection using the required form. (Form ID: RSC-3
- Disclosure of Relationship with Residential Service Company.) Any fee must be commensurate
with the service provided.
The time frame that a broker or delegated supervisor has to respond to clients, agents, or other brokers
is two (2) days.
The time frame that a broker or delegated supervisor has to deliver TREC correspondence to their
agents is three (3) days.
Broker-Sales Agent Relationships
- The broker must ensure that all sponsored agents are acting in compliance with federal, and
state laws and TREC rules. - A broker is responsible for any property management activity by the broker’s sponsored sales
agent that requires a real estate license. - When a sales agent performs a real estate brokerage activity for the first time, the broker must
require that the sales agent receive coaching and assistance from an experienced license holder
competent for that activity. - If the broker wishes to terminate sponsorship, he must notify the sales agent in writing and
return the sales agent’s license certificate to the Commission immediately.
A sales license
holder who wishes to terminate his association with the sponsoring broker must do so in writing.
After sponsorship is terminated, commissions owed to the salesperson will still be paid
to the broker.
That broker owned the listing or buyer representation agreement at the time the
commission was earned.
- Brokers must designate anyone who leads, supervises, or directs a team in their brokerage as a
delegated supervisor, with TREC, if he or she has or will be supervising for more than three months. This will require that person to take the six-hour broker responsibility course at each
license renewal.
The broker shall provide this information to TREC within 30 days of any
such delegation and again within 30 days after the delegation has ended. The broker associate or newly licensed broker will also notify TREC in writing then they are no longer associated
with the broker or no longer acting as a delegated supervisor.
- An applicant who has applied with a broker and passed the test cannot engage in business
until the license is received in the broker’s office. An applicant applying without a broker cannot
engage in business until a broker is selected and receives the applicant’s license.
Broker’s Responsibility for Acts of Sales Agent
- A broker who sponsors sales agents or is a designated broker for a business entity shall maintain,
on a current basis, written policies and procedures to ensure that: - Each sponsored sales agent is advised of the scope of the sales agent’s authorized activities
subject to the Act and is competent to conduct such activities, including competence in the
geographic market area where the sales agent represents clients. - Each sponsored sales agent maintains their license in active status at all times while engaging
in activities subject to the license Act. - Any and all compensation paid to a sponsored sales agent for acts or services subject to the
Act is paid by, through, or with the written consent of the sponsoring broker. - Each sponsored sales agent is provided on a timely basis, before the effective date of the
change, notice of any change to the Act, Rules, or Commission promulgated contract forms. - Each sponsored sales agent complies with the Commission’s advertising rules.
- If a broker dies, or is declared legally insane or if a broker’s license is suspended, his sales agent
must change to another broker immediately. When changing to a new broker, a license holder
is authorized to engage in the business as soon as the sponsorship forms have been mailed to
TREC. This is also true when re-activating an inactive license.
Appropriate Use of Unlicensed Assistants
An unlicensed assistant must be careful to avoid activities requiring a license. The unlicensed assistant,
the license holder, and the broker could all be fined under TREC’s authority to assess an
administrative penalty.
An unlicensed assistant may:
* Accompany a license holder on showings and to open houses
* Set appointments for a license holder to show property
* Place for sale signs on property, accompany an inspector, place advertisements as directed by
the license holder
* Assist in arranging financing at the direction of a license holder in an administrative way –
assist a buyer in obtaining forms or information to apply and qualify for a loan
* Train and motivate license holders
* Manage an office
* Perform all clerical activities for the broker, such as typing contracts, preparing reports and
CMAs, filing, copying and organizing information
* Act as an onsite apartment manager
An unlicensed assistant cannot:
* Host an open house or show property
* Unlock a door to a property for a prospect
* Telemarket for listings (prospect for leads)
* Engage in any activity requiring a license
