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© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 1
New York Real Estate for Brokers, 5th e
By Marcia Darvin Spada Cengage Learning
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 2
Chapter 2
Real Estate Agency Disclosure
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 3
Chapter 2 Key TermsAdvance informed
consent to dual agency
AgentBroker’s agentBuyer’s agentBuyer brokerageClientCustomer
DisclosureDual agent/dual
agencyEstoppelExclusive-right-to-
sellExpress agencyFiduciary/
fiduciary duties
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 4
Chapter 2 Key Terms (continued)
First substantive contact
General agentImplied agencyInformed consentOpen listingPrincipal
Seller’s agentSingle agentSpecial agentSubagentUndisclosed dual
agencyUndivided loyaltyVicarious liability
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 5
Agency Relationships
PrincipalPrincipal
CustomerCustomer
Agent Agent
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 6
Fiduciary Responsibilities Obedience Loyalty Disclosure of
information Confidentiality Accountability Reasonable Care,
Skill, and Diligence
© 2013 All rights reserved.
MisrepresentationA false
representation of a material fact
A person making the false representation knew or should have known it to be false
A person acts or does not act based on the misrepresentation
A person who relies on the misrepresentation in acting or not acting
Chapter 2 Real Estate Agency Disclosure 7
© 2013 All rights reserved.
Duties of the Principal to the AgentThe agent should not be liable if the
principal withholds information that
causes the agent to make incorrect
representations to third parties
Chapter 2 Real Estate Agency Disclosure 8
© 2013 All rights reserved.
Latent DefectsHidden or concealed defects that cannot be discovered by ordinary examination or inspection
Buyers may accuse the inspector of failing to notice the problem
A leaky sewer pipe may cause damage to a number of property components
Chapter 2 Real Estate Agency Disclosure 9
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 10
Types of CompensationPercentage of final sales price
Legal
Flat fee paid by seller or buyer
Legal
Net listing Illegal
Franchise fee LegalKickback to non-licensed parties
Illegal
Referral fees to other licensees
Legal
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 11
Creation of AgencyAGENCY
AGREEMENT
Implied Actions of the parties
ExpressOral or written
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 12
Agency AlternativesBroker’s agentBuyer AgentCooperating agentDesignated agentDual AgencySeller agent Single agentSubagent
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 13
Definition of Dual Agent
An agent who is acting as a buyer’s agent and
a seller’s agent in the same transaction
Buyers and sellers may consent to dual agency
in advance of it occurring by indicating
consent on the agency disclosure form
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 14
Dual Agency
Unintended
Intended
Undisclosed
Consensual/Informed consent
Designatedagent
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 15
Designated Agent Definition
A salesperson or associate broker,
working under the supervision of a
real estate broker, who has been
assigned to represent a client when a
different client is also represented by
such real estate broker in the same
transaction.
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 16
Designated Sales Associate
The designated sales
associate and
representative
broker cannot
provide the
fiduciary duty of
undivided loyalty.
Both disclosure
forms include a
section on “dual
agent with
designated sales
associates”
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 17
Buyer Agency
Buyer ascustomer
Buyer client
Compensation frombuyer/ seller or both
Fiduciaryrelationship with buyer
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 18
The Listing Agreement Exclusive-right-
to-sell
Exclusive agency
Open listing
Exclusive-right-to-rent
Exclusive-right-to represent
( buyer agency)
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 19
The Agency Disclosure Form
Sale or rental of 1-4 unit residential properties and condos and coops in any size building
Informs consumers oftheir agency relationship and choices
Used at the first substantive contact or for advance informed consent to dual agency
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 20
Two separate agency disclosure forms required
one for
seller/buyer
transactions
another for
landlord/tenant
transactions
© 2013 All rights reserved.
Other Types of Disclosure Agency Agricultural districts
Electrical service Lead-based paint Mold Property condition
Radon Stigmatized Property
UFFI Utility surcharge
Uncapped gas wells
Chapter 2 Real Estate Agency Disclosure 21
© 2013 All rights reserved.
Stigmatized Property DisclosureOccupants who have AIDS or other
illnesses not transmitted through occupancy
Properties that were a site of death due to natural causes, accidents, suicide, homicide, crime, and other reasons
Chapter 2 Real Estate Agency Disclosure 22
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 23
What is a natural gas well?
A natural gas
well is a type of
well that is dug or
drilled that yields
or has yielded
natural gas.
Three types:
Oil wells
Natural gas wells
Condensate wells
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 24
Dangers of Uncapped Wells Falling in
Leakage of gas
Combustion/Explosion
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 25
Disclosure Requirements for uncapped natural gas wells
Disclosure is made before buyer and seller enter into a contract of sale
Seller must disclose to buyer the existence of any uncapped natural gas wells on the property of which the seller has actual knowledge
Cost of capping
should not be
passed to new
property owner
© 2013 All rights reserved.Chapter 2 Real Estate Agency Disclosure 26
The Well HeadMounted at the opening of the well to regulate and monitor the extraction of hydrocarbons from underground
Prevents leaking of oil or natural gas out of the well
Prevents blowouts due to high pressure formations
Source: NETL – DOE