VREB issues guidance on written brokerage agreements

As you know, Virginia’s new agency law took effect July 1. In short, the new law requires that all brokerage relationships be expressed in writing and that in dual agency situations an enhanced disclosure of the limits of an agent’s duties be provided to both clients.

Back in July, we notified brokers of a Virginia Real Estate Board Work Group that was appointed to investigate the issue of written brokerage agreements and when they must be signed.

At its meeting September 6, the Virginia Real Estate Board approved the “Guidance Document on the Necessity of Brokerage Agreements” to clear up some confusion among licensees as to when a written brokerage agreement is required pursuant to the July 1, 2012 changes to the law. All licensees who have already attended the mandatory Residential Standard Agency course will receive notification about this document from their course providers, as mandated by the VREB. The document is posted on the VREB website as well as through VAR’s online Agency Center. All VAR members are urged to read the document thoroughly.

CLICK HERE to view a short video from Cliff Wells, Chairman of the Virginia Real Estate Board, and to read and download the three-page guidance document.

VAR’s attorneys are working collaboratively with the Richmond Association and Northern Virginia Association attorneys to develop a Q&A resource on the guidance document.

Shameless plug: if you haven’t taken the mandatory RSA course yet, you have two chances to do so (PLUS two chances to take great Buyer Agreement classes) at the 2012 Real Show. Registration is O-P-E-N!

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5 Responses to VREB issues guidance on written brokerage agreements

  1. I think these new guidelines have opened a can of worms for our industry. How can an Agent determine the “intent” of a customer or prospect, as specified by these new guidelines, unless the customer specifically acknowledges their intent to the agent. A person can’t even testify in a court of law as to the “intent” of another person and now we are expected to do this everyday?

  2. Kim Hannemann says:

    Quite clearly – and please feel free to suggest to me in the law where I am wrong – any brokerage agreement requires the agreement of the licensee AND the party (client or customer). They have to agree that they have an agreement – agreement cannot be determined unilaterally by the agent or by VREB, or in law if it came to that (which it doesn’t). If the party has not ENGAGED the licensee, there is no agreement, and the agreement has not “commenced,” and thus there is nothing to put in writing.

    Lem Marshall was right. You don’t have a brokerage agreement until you have one.

  3. Pat Snyder says:

    I have been teaching real estate classes for over 40 years. I feel the majority of this is not new law, but the enforcement of the law that was passed in 95. I also teach the ABR courses. First I feel that many agents do not understand sub-agency. It of course is when you show a customer buyer a listing of another company. Prior to 95, we had vicarious liability. If the sub-agent did something wrong, the listing broker could be held responsible. Vicarious liability was eliminated in 95 . So now If the sub-agent is working with a buyer customer and does something wrong, the listing agent is not held responsible unless they knew or should have know that the sub-agent was doing something wrong and took no action to correct it.

    I feel that many agents either have not understood what vicarious liability is, or they did not realize that is was eliminated in 95.

    Many companies say no to sub-agency, but don’t why. Just that every person should be represented. But that is not real life, there are those that for one reason or another you may, after discussing options, the prospect may decide that they do not want representation.

    The big problem is that if the buyer chooses to be a customer the agent must be sure to read the agent full in the MLS. If the property in the MLS say no to sub-agency and/0 commissin. The agent must reLize that they cannot automatically show the property. They must call the listing agent and tell them that they have a buyer customer and would like to show the propery since it says no to sub-agency. If the agent gives permissin, the agent must ascertain how much commision they will be paid, so they may complete the brokerage fee agreement. I would suggent you have them email that confirmation. This will guarentee you a commission. Thus the reason for the signing of the unrepresented disclosure(customer). No big deal, because after explaining what you can and cannot do, this is their desire…knowing you cannot give any advice. If they want to proceed and find a property they want to make an offer on, the purchase agreement would be completed and the brokerage fee agreement reflecting the commission.

    Most seller’s really don’t care who sells the property, because they will feel their agent is looking out for their interest.

  4. I agree with both comments, But I think the central problem is that the law needs to “clear” for agents and “easily understandable” for the general public. Most buyers’ and sellers’ eyes will glaze over if you try explaining the intricacies of agency, sub-agency, procuring cause etc.

    The law needs to be simple for the Public and Agent:

    “I can give you information. I can show you a property. BUT, I am not Your Agent ( i.e. – I can’t give you Advice) until you Hire Me.” It’s that simple. I can help you, but I can only “Advise you”, once you Hire me. At that time, a written agreement should be signed.

  5. bob pettis says:

    Is there a special brokerage agreement for the seller under sub-agency? Would the sub-agent have to get it signed by the seller prior to showing the home? How exactly does it work when you are working for the seller under sub-agency (unrepresented buyer).

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