Real Estate Agency Scenarios-2017 AAR PC

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Scenarios:

Scenario #1

The seller has instructed the listing broker not to present any offers to purchase the home unless the offer is more than $350,000. The buyer’s broker has presented an offer for $320,000, and the listing broker has informed the buyer’s broker that this $320,000 offer will not be presented to the seller. Does the listing broker have to present the $320,000 offer? If not, does the buyer’s broker have the right to see the seller’s written instruction?

Answer: The listing broker is required to present all offers to the seller, unless otherwise instructed by the seller. See A.A.C. R4-28-802(B). There is no requirement, however, that the listing broker present any such written instruction from the seller to the buyer’s broker.

Scenario #2

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The broker is a dual agent in the sale of a home. The seller and buyer have executed the Consent to Limited Representation Agreement. The seller has asked the broker for the phone number and the address of the buyer. Can the broker as a dual agent furnish the buyer’s address and phone number to the seller?

Anwers: Under lines 16-17 of the Consent to Limited Representation Agreement, the broker cannot release confidential information about the seller or the buyer without their written authorization. Therefore, the broker can furnish to the seller the buyer’s address and phone number only with written authorization from the buyer.
Quick Quiz

Fill in the Blank:
Under lines 16-17 of the to Limited Representation Agreement, the broker cannot release confidential information about the or the buyer without their written authorization.

Scenario #3

The seller and the listing agent execute a 4% listing agreement. One week later the buyer and the seller execute a purchase contract and open escrow. The seller now demands that the listing agent reduce the listing commission to 3%. The listing agent agrees and an amendment to the listing agreement is executed. The listing agent’s broker, however, does not want to amend the 4% listing commission. Is the listing agent’s broker bound by the listing agent’s agreement with the seller to reduce the 4% commission to 3%?

Answer:  Yes. The listing agent is the agent of their broker. Third parties such as the seller have the right to reasonably believe that the agent is authorized to take action or make representations on behalf of the agent’s broker. See Anchor Equities, Ltd. v. Joya, 160 Ariz. 463, 466,773 P.2d 1022, 1025 (App.1989). (Apparent authority exists “when the principal’s conduct leads a third party to have reason to believe that he has authorized his agent to take the actions or make the representations in question.”)

Scenario #4

The seller of the home is an LLC. One of seven members in the LLC is a real estate licensee employed by Brokerage firm “A.” This member of the LLC discloses to all potential buyers his licensing status. The LLC has a listing agreement with an agent employed by Brokerage firm “B.” An offer to buy the home is presented by a buyer’s agent who is employed by Brokerage firm “A.” Is this buyer’s agent a dual agent because a member of the LLC is also employed by Brokerage firm “A?”

Answer:  No. Although the real estate licensee that is a member of the LLC has to disclose his licensing status, this licensee merely by being a member of the LLC does not represent the LLC in the transaction. Furthermore, the LLC is represented by a listing broker employed by the separate Brokerage firm “B.”

Quick Quiz

Fill in the Blank:
Third 
such as the seller have the right to reasonably believe that the agent is authorized to take action or make representations on behalf of the agent’s .

Scenario #5
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A licensed builder constructs a “spec” home, and lists the home with the real estate broker. A buyer represented by the real estate broker signs a contract with the builder to purchase the home, and the real estate broker becomes a dual agent. The transaction closes. One year after the closing the buyer has significant problems with the electricity and the plumbing in the home. The buyer contacts the real estate broker for assistance. Can the real estate broker assist the buyer in resolving the electrical and plumbing problems with the builder?

Answer:  No. The real estate broker was a dual agent in the transaction. Therefore, the real estate broker can only recommend to the buyer, and also to the builder if the builder requests assistance, to contact an attorney or other professional.
Note: Although agency generally terminates at the closing of the transaction, the real estate broker as a dual agent cannot assist after closing either the seller or the buyer in matters relating to the transaction.

Scenario #6

The buyer’s agent (a female) has shown the buyer (a male) several homes. The buyer makes an offer on a home, but the offer is rejected by the seller with no counter-offer. The listing agent then contacts the buyer’s agent and states that the reason that the buyer’s offer was rejected without a counter-offer, was that the buyer is a registered sex offender. The buyer’s agent now wants to immediately terminate the representation of the buyer. Can this representation of the buyer be immediately terminated?

Answer:  Yes. Registered sex offenders are not a protected class, and the female buyer’s agent (or a male buyer’s agent) is not required to continue to show homes to the buyer.
Quick Quiz

Fill in the Blank:
Registered offenders are not a protected class, and the female buyer’s agent (or a male buyer’s agent) is not required to continue to show homes to the .

Scenario #7

An agent of thimagese broker owned an apartment building. The agent did not list the apartment building through the broker but acted as a FSBO in the sale of the apartment building. After the sale of the apartment building the buyer discovers significant roof and plumbing problems. The buyer contends that the broker is liable for the agent’s non-disclosure of these roof and plumbing problems. Does the broker have any liability?

Answer:  Probably not. If the agent was acting solely as a principal, and not as an agent of the broker, in the sale of the apartment building, the broker should have no liability for any non-disclosure by the agent of the roof and plumbing problems. On the other hand, if the agent apparently had authority to act as an agent of the broker, the broker could have liability even if the apartment building was not listed with the broker. Examples of apparent authority would be the agent furnishing his business card to the buyer, and the agent having meetings/telephone calls with the buyer from the broker’s office.

Scenario #8

The real estate agent represents the home builder in the subdivision. A Buyer signs a disclaimer acknowledging that the real estate agent represents the home builder. During the course of the transaction, however, the real estate agent answers questions for the Buyer, assists the Buyer in preparing the contract, explains the terms of the contract to the Buyer, and provides other helpful information to the Buyer. Is the real estate agent a dual agent representing not only the home builder but also the Buyer?

Answer:  Probably. If the real estate agent furnishes information and advice to the Buyer, and otherwise acts on behalf of the Buyer, the real estate agent will be deemed to be a dual agent. In other words, the analogy of “walks like a duck, talks like a duck” would be applicable, despite the written disclaimer of agency signed by the Buyer.
Quick Quiz

Fill in the Blank:
If the was acting solely as a principal, and not as an agent of the broker, in the sale of the apartment, the broker should have no liability for any non-disclosure by the agent of the roof and plumbing  .

Scenario #9

A broker had a listing agreement with the seller to sell the seller’s home. The broker subsequently represented a buyer and presented the seller with the buyer’s offer, along with a Consent to Limited Representation form (“Consent”). The seller refused to sign the Consent. Did the broker breach her fiduciary duty to the seller by representing the buyer before procuring the Consent?

Answer:  Yes. Arizona law permits a real estate licensee to represent both the buyer and the seller in a transaction, provided that both the buyer and seller consent to the dual representation. Therefore, the broker should have obtained the Consent from the seller prior to representing the buyer.

Scenario #10
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The purchase contract provides that the buyer has ten days after the physical inspection to notify the seller in writing of any defects. The buyer notified the listing broker of the defects, but could not locate the seller. Does notice to the listing broker constitute notice to the seller?

Answer:  Yes. Under Arizona law, notice to an agent generally constitutes notice to a principle. In Re Milliman’s Estate, 101 Ariz. 54, 415 P.2d 877 (1966). On these facts, since the listing broker was notified in writing of the defects, this notice in imputed to the seller.
Quick Quiz

Fill in the Blank:
Under Arizona, notice to an agent generally constitutes notice to a .

 

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