1. Florida Real Estate Principles, Practices & Law 39th Edition
Unit 4: Authorized Relationships, Duties, and Disclosure

2. Law of Agency
When people delegate authority to another to act on their behalf, an agency relationship is created
Three types of law
Common law (unwritten law)
Case law
Statutory law
F.S. 475 and F.S. 455
Administrative law
FREC rules

3. Agency Relationships in General Business Dealings
Fiduciary relationship
Opposite of ‘at arm’s length’ relationship
Caveat emptor
Principal
Person who delegates authority to another
Agent
Person who is authorized to represent and act for principal
Universal agent
General agent
Special agent

4. Brokerage Relationships in Florida
Three options in real estate transactions
Transaction broker for buyer and/or seller
Single agent for buyer or seller (not both)
No brokerage relationship (nonrepresentation)

5. Dual Agency Dual Agent Fiduciary
Brokerage who represents as a fiduciary both the buyer and the seller in a real estate transaction
Florida law prohibits a brokerage firm from creating a fiduciary relationship with both the buyer and the seller
Fiduciary
Relationship of trust and confidence between broker as agent and the principal

6. Written Disclosure Required in Residential Sales
Sale of improved residential property of four or fewer units
Unimproved residential property intended for four or fewer units
Agricultural property of 10 acres or less

7. Disclosure Does Not Apply To:
Nonresidential transactions
Rental or leasing, unless there is an option to purchase property with four or fewer residential units
Auctions
Appraisals
Business opportunities

8. Transaction Broker Relationship Presumed
Under Florida law, it is presumed licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established
A transaction broker disclosure is not required

9. Transaction Broker Relationship
Provides limited representation to customer (buyer, seller or both)
Does not represent either buyer or seller as a fiduciary or as a single agent
Customer is not responsible for actions of transaction broker

10. Duties of a Transaction Broker
Deal honestly and fairly
Account for all funds
Use skill, care, and diligence in the transaction
Disclose all known facts that materially affect the value of real property not readily observable
Timely present of all offers and counteroffers
Exercise limited confidentiality, unless waived in writing by a party
Perform additional duties mutually agreed to

11. Transaction Broker Relationship
Parties give up rights to undivided loyalty
Limited representation allows licensee to assist both buyer and seller
License cannot represent one party to detriment of other party
Not required to give customers a written transaction broker notice but still have duties of a transaction broker

12. Single Agent Relationship
A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction
Principal
The party (client) with whom a licensee has entered into a single agent relationship

13. Subagents Authorized to assist and represent the agent
Duties are delegated by the original agent
Broker’s sales associates are general agents of the broker and subagents of the broker’s principals
The broker is an agent of the principal
Sales associates owe same fiduciary obligations to the principal as does broker

14. Duties of a Single Agent
Deal honestly and fairly
Loyalty
Confidentiality
Obedience
Full disclosure
Account for all funds
Skill, care, and diligence in the transaction
Timely present all offers and counteroffers
Disclose all known facts that materially affect the value of residential real property that are not readily observable

15. No Brokerage Relationship (Nonrepresentation)
Seller or buyer can choose not to be represented
Broker facilitates sale/purchase
Law does not require buyers and seller be represented

16. Duties in No Brokerage Relationship
Account for all funds entrusted to the licensee
Deal honestly and fairly
Disclose all known facts that materially affect the value of residential property that are not readily observable to the buyer

17. Whose Duty? A Account for all funds D Deal honestly and fairly
D Disclose all known facts that affect the value of residential property
Transaction broker
Single agent
No brokerage relationship

18. Whose Duty? Use skill, care, and diligence
Present all offers and counteroffers
Transaction broker
Single agent
Exercise limited confidentiality
Perform additional duties

19. Whose Duty? C Confidentiality O Obedience L Loyalty
D Disclosure (full)
Single agent

20. Brokerage Relationship Limitations
If a brokerage firm is
Transaction broker for seller, then
Transaction broker for buyer or
No brokerage relationship with buyer
Single agent for seller, then

21. Practical Example #1
Sales associate Amy works for XYZ Realty, Inc. Amy lists a house and establishes a single agent relationship with the seller. A buyer contacts Amy and wants to view the property. What relationship may Amy have with this buyer?

22. Example #1 Solution
Because Amy and XYZ Realty, Inc. have a single agent relationship with the seller, Amy must give the buyer a No Brokerage Relationship disclosure before showing the property.
Single agent for the seller  No brokerage relationship with the buyer

23. Practical Example #2
Broker Brown is working with buyer Jones as a transaction broker. Broker Brown has also listed a property that buyer Jones is considering purchasing.
If buyer Jones is going to buy this property, what relationship can Broker Brown have with the owner of the listed property?

24. Example #2 Solution
Broker Brown can list the property as a Transaction Broker or with No Brokerage Relationship. He cannot be a Transaction Broker for the buyer and a Single Agent for the seller.
Transaction broker with buyer  Transaction broker or no brokerage relationship (nonrepresentation) with seller

25. Disclosure Requirements
Duties must be described and disclosed in writing (single agent or no brokerage relationship)
Can be included in listing agreement
Signature line inserted following disclosure
Single agent disclosure before, or at time of entering into a listing agreement, or before showing property
No brokerage notice before showing property

26. Recordkeeping and Retention
Brokers must retain agreements that engage their services for 5 years
Brokers must retain brokerage relationship disclosure documents for 5 years
All residential transactions that result in a written contract
Includes files of properties that fail to close

27. Exceptions to Disclosure Requirements
Licensee knows that a single agent or transaction broker represents buyer or seller
Bona fide open house or model showing
Unanticipated casual encounters
Responding to general questions of advertised property
Communications concern services offered
When selling new residential units built by the owner

28. Transition to Single Agent Relationship
F.S. 475 permits a licensee to change the relationship from a single agent to a transaction broker, the principal must sign
Consent to Transition to Transaction Broker Notice

29. Practical Example #3
Sales associates Yvette and Zach work for Extra-Fine Realty. Yvette has just listed the house at 3456 Main St. as a single agent for the seller. Zach is a single agent for buyer Black. If buyer Black wants to view the house at 3456 Main St., how can this legally happen?

30. Example #3 Solution
Because Extra-Fine Realty is acting as a single agent for both the seller of 3456 Main St. and for buyer Black, both the seller and the buyer must sign a Consent to Transition to Transaction Broker notice to show this property to buyer Black.

31. Designated Sales Associates
Nonresidential transactions only
At the request of the buyer and seller, the broker may designate sales associates to act as single agents for different customers in the same transaction
Buyer and seller each must have assets of at least $1 million
Written disclosures
Single agent disclosure
Designated sales associate disclosure

32. Terminating a Brokerage Relationship
Fulfillment of brokerage relationship purpose
Mutual agreement to terminate
Expiration of agreement
Broker renounces by giving notice
Principal revokes relationship by giving notice
Death of broker
Destruction of property or eminent domain
Bankruptcy of principal or customer