Legal Question and Answers Part 3-BMC #3 – Supervision

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Broker Generally Not Responsible for Agent Selling Own Property

ISSUE:

The broker’s agent owns twenty lots in northern Arizona, which the broker’s agent is subdividing and selling. The broker’s agent is properly disclosing in advertising to prospective buyers that the broker’s agent is an “owner/agent” and is disclosing in writing that the broker’s agent is a real estate licensee who has an ownership interest in the twenty lots. Does the broker have any liability for the sale of these twenty lots by the broker’s agent?

ANSWER:

Probably not. The broker is generally not responsible for an agent who is not acting “for another,” i.e. the agent is acting personally either as a buyer or seller unless the agent expressly or apparently represents to other parties in the transaction that the brokerage firm is involved in the transaction. The apparent authority could be conducting business from the brokerage office, e.g. making telephone calls or meeting prospective buyers in the brokerage office or handing out business cards with the brokerage name.  Arizona REALTOR® October 2010 
 

Broker Must Maintain a Definite Place of Business

ISSUE:

A broker leases space in an executive suite. The broker does not have a defined office. However, per the executive suite lease, the broker is allowed access to an office and conference room by appointment for an agreed upon fee.  Must a real estate broker have a definite physical office by statute?

ANSWER:

Yes. Pursuant to A.R.S. § 32-2126(A), a broker must “have and maintain a definite place of business.” The Arizona Department of Real Estate (ADRE) takes the position that leasing space at an executive suite satisfies this requirement only if there is a definite space leased on a continual basis. Here, because the broker only gets an office and a conference room on an as-needed basis and does not have a definite place, he is in violation of the statute as interpreted by the ADRE. 
Quick Quiz

Fill in the Blank:
Pursuant to A.R.S. § 32-2126(A), a broker must “have and a definite place of business.”

Broker Required to Supervise Agent with Website Providing Reviews of Real Estate Licensees

ISSUE:

The broker’s agent has a website that provides reviews for the general public of the abilities of individual real estate licensees. The primary purpose of the website is to procure potential clients. Does the broker have a duty to supervise the agent engaged in providing reviews of real estate licensees for the general public?

ANSWER:

Probably. If the purpose of the website is to procure potential clients, a real estate license is required. A.R.S. §32-2101(47)(i). Therefore, the broker probably has a duty to supervise this activity and any other activity of the agent which requires a real estate license. See A.A.C. R4-28-1103.  Arizona REALTOR® November 2008
 

Brokerage Firm Can Represent Buyers with “Back-Up” Offers

ISSUE:

The brokerage firm is a dual agent representing both buyer #1 and the seller in a transaction with the proper AAR Forms. After escrow is opened, another agent in the brokerage firm represents buyer #2 who wants to make a “back-up” offer. Buyer #2 has questioned this agent about the terms of the transaction between the seller and buyer #1. Are the other agents in the same brokerage firm required to disclose to the agent for buyer #2 any terms such as price and closing date of the transaction in escrow?

ANSWER:

Probably not. Under the Real Estate Agency Disclosure and Election Form and the Consent to Limited Representation Agreement form, the seller, buyer #1, and buyer #2 agree that there are certain limitations on the representation by the brokerage firm. For example, both forms indicate that disclosure of price and terms and other confidential information requires written authorization.  Arizona REALTOR® Digest September 2006
 

Brokerage Firm Not Liable for Real Estate Agent Acting as FSBO

ISSUE:

A real estate agent in the brokerage firm is selling her own home as a FSBO. The brokerage firm is concerned about liability for the acts of the real estate agent. Does the brokerage firm have any liability for the acts of the real estate agent selling her own home as a FSBO?

ANSWER:

If the real estate agent is acting as a FSBO without any involvement with the brokerage firm, e.g., making telephone calls, meeting prospective buyers at the brokerage firm, distributing her business card, or using brokerage firm stationery, the brokerage firm should have no liability to either the buyer or the Arizona Department of Real Estate for the acts of the real estate agent in the FSBO sale of her own home.  Arizona REALTOR® Digest February 2004
 

Quick Quiz

Fill in the Blank:
Under the Real Estate Agency and Election Form and the Consent to Limited Representation Agreement form, the seller, buyer #1, and buyer #2 that there are certain limitations on the representation by the brokerage .

Brokerage May Cancel Listings at Owner’s Request

ISSUE:

The agent was severed from the brokerage firm and had several listings at the time of the severance.  The brokerage firm does not want to do business with the owners, and the owners have expressed an interest in following the agent to the new firm.  Must the brokerage firm honor the listing agreement under the circumstances?

ANSWER:

No.  Listings belong to the brokerage firm.  However, the brokerage firm does not want to do business with the owners.  Additionally, the owners have expressed an interest in following the agent to her new firm.  Accordingly, the broker may either cancel the listing agreements or assign them to the new brokerage firm with the sellers’ written consent.  Arizona REALTOR® Magazine – March 2012 
 

Brokerage May Cancel Listings at Owner’s Request

ISSUE:

The agent was severed from the brokerage firm and had several listings at the time of the severance.  The brokerage firm does not want to do business with the owners, and the owners have expressed an interest in following the agent to the new firm.  Must the brokerage firm honor the listing agreement under the circumstances?

ANSWER:

No.  Listings belong to the brokerage firm.  However, the brokerage firm does not want to do business with the owners.  Additionally, the owners have expressed an interest in following the agent to her new firm.  Accordingly, the broker may either cancel the listing agreements or assign them to the new brokerage firm with the sellers’ written consent.  Arizona REALTOR® Magazine – March 2012
 

Buyer Not Required To Be Represented When Purchasing From Owner/Agent

ISSUE:

The listing agent is also the seller in the transaction. The buyer has submitted an offer without the assistance of a real estate agent. May the transaction proceed even though the buyer is unrepresented?

ANSWER:

Yes.  There is no requirement that any party to a real estate transaction is represented by a real estate agent. Accordingly, the buyer is free to proceed with the purchase without the assistance of a real estate licensee. The listing agent and brokerage firm should confirm this understanding in writing with the buyer so that there is no confusion as to the representation and the duties owed.

Buyer’s Broker Can Pay Buyer’s Closing Costs

ISSUE:

During the escrow period, the buyer’s broker agreed to pay the closing costs of the buyer. The buyer’s broker is not receiving any compensation from the buyer but is receiving a co-broke commission under MLS from the listing broker. Can the buyer’s broker pay the buyer’s closing costs at close of escrow?

ANSWER:

Yes. A buyer’s broker is entitled to credit the buyer with a portion of the buyer’s broker’s commission, in as much as the cost of the transaction is reduced to the consumer.  Arizona REALTOR® Digest May 2005
 

Quick Quiz

Fill in the Blank:
A buyer’s broker is to credit the buyer with a portion of the buyer’s broker’s commission, in as much as the cost of the transaction is reduced to the .

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