Today we peel back another layer of the new Real Estate law. Many real estate agents are confused by SC Code §40-57-370, particularly those agents who only represent a builder, REO or RELO Company as well as those who are not allowed by their brokerage or client to provide buyer agency.
Section 370(A) requires the agent to provide the following at the first practical opportunity to all potential buyers and sellers with whom the agent has substantive contact:
1. A meaningful explanation of the brokerage relationships that are offered by the agent’s brokerage including an explanation of customer and client services; and
2. A copy of the “Disclosure of Brokerage Relationships.” This form is prescribed and made available by the Real Estate Commission; and
3. Have executed an “Acknowledgment of Receipt of the Disclosure of Brokerage Relationships” form which must be in the agency agreement and sales contract. The buyer and the seller must note in the sales contract whether they received customer or client service in that real estate transaction.
Prior to the new law becoming effective the agent was required to provided a meaningful explanation of agency when the conversation turned substantive regarding one’s financial abilities or real estate needs. The law now requires the agent to explain the types of brokerage the brokerage company offers. The explanation must also include a discussion of the services received by a customer or client. An effective explanation of agency in the past would have certainly included an explanation of client and customer services.
Under the previous statute all licensees would provide an explanation of agency even if the agent was a site agent for a builder or the agent’s client-seller refused to consider dual agency. For example, when a consumer entered a model home, the agent would have explained agency by notifying the potential buyer that they were the representative of the builder and that they had certain duties for that client which included a duty of disclosure and loyalty. Therefore, the potential buyer would be cautioned not to say anything that the buyer did not want disclosed to the builder/seller.
Today, the law requires a discussion of the types of brokerage the agent’s brokerage offers. Many real estate agents are left to wonder what do they explain if their brokerage does not allow buyer representation or if the seller/client has already refused to consider dual agency? It appears the statute holds that at first substantive contact the agent would explain that they represent the seller and that their agency does not allow buyer agency or the seller will not consider dual agency. An effective explanation would include the lack of buyer confidentiality and the requirement of full disclosure and loyalty to the seller.
Secondly, the law requires the agent to provide the “Disclosure of Brokerage Relationship Form.” The law does not contain any exemptions in providing the agency form. Therefore, even if your brokerage does not allow buyer agency or the seller has refused to consider dual agency, you must still provide the form to prospective buyers. Be sure to take the form to the model home or open house.
Lastly, the requirement for the consumer to sign an “Acknowledgement of Receipt of the Disclosure of Brokerage Relationship” form is also causing confusion. The law states the acknowledgement must be in the agency agreement and in the sales contract. Based on the language of the statute the agent would only have to have the acknowledgment form signed if they entered into agency with the consumer and/or the consumer signs a sales contract. So the form does not need to be signed if the agent only explains the services offered and agency is not entered with the buyer.
While the law holds that the acknowledgement is required in the sales contract, the legislature apparently did not envision a contract being used other than the REALTORS® contract. Since the statute does not apply to attorneys, builders or consumers the statute presumably does not require those non-REALTORS contracts to contain the provision.
BLAIR CATO PICKREN CASTERLINE has set the date of its annual Real Estate Agent Cinco de Mayo Event. The event will be held on May 4, 2017 at 701 Whaley Street. We will have food by White Duck Taco, beer and margaritas, music and prizes. The event is open to all real estate agents. Don’t forget to save the date!