Alabama Administrative Code › Title 790 - ALABAMA REAL ESTATE COMMISSION › Chapter 790-X-3 - DISCIPLINARY ACTIONS › Section 790-X-3-.13 - Agency/Brokerage Services Disclosure

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The Real Estate Consumers Agency and
			 Disclosure Act (RECAD) requires the Alabama Real Estate Commission to write a
			 Real Estate Brokerage Services Disclosure form which describes the alternative
			 types of brokerage services available to consumers in Alabama transactions. The
			 use of this form is mandatory as required by RECAD and this rule. Additionally,
			 the Commission has written a Consumer Information Booklet which is optional and
			 may be used by any licensees who choose to use it.
(2) Licensees, except those engaged in rental
			 or property management services, and those in transactions set out in Section
			 34-27-82(d),
			 are required to provide the Real Estate Brokerage Services Disclosure form to
			 the consumer as soon as reasonably possible for his or her signature. Consumers
			 are not required by law to sign the form, although the licensee should
			 encourage that it be signed. If the consumer declines to sign, the licensee
			 shall make a note to this effect on the form. The texts of the optional
			 Consumer Information Booklet and the mandatory form follow:
A Consumer Information Booklet
What Consumers Need to Know When Working with a Real
				Estate Broker
As real estate transactions have become more complex and
				varied, the types of real estate brokerage arrangements available to the public
				have evolved to meet the changing needs of consumers entering this market. This
				booklet is intended to provide buyers and sellers with a description of the
				different types of brokerage arrangements so that consumers can choose the type
				of brokerage services best suited to their needs.
Know Your Rights
At the initial contact between a licensee (both sales persons
				and brokers) and the public, the licensee shall be considered to be a
				transaction broker. As soon as reasonably possible and before the exchange of
				confidential information, Alabama law requires the licensee to provide you with
				a written disclosure form that describes different types of brokerage
				arrangements. You are encouraged to read and sign this disclosure form.
After disclosure you may then choose the type of brokerage
				agreement best suited to your needs. This brokerage agreement will contain a
				statement of the specific brokerage services the broker will provide. In the
				absence of a signed brokerage agreement, the transaction brokerage relationship
				will remain in effect. Make sure you talk to the real estate licensee with whom
				you are working to determine the type of services you need or will receive
				under alternative brokerage arrangements.
Customer or Client?
The most important thing you need to know when working with a
				real estate licensee is whether you are a client or a customer. A licensee owes
				certain duties to a client that are different from the services the licensee
				performs for a customer.
Agent and Client
An agent is a person who acts for or represents you in
				negotiations with other parties. The client or principal is the person the
				agent represents. The licensee when acting as an agent must loyally represent
				the best interest of the client by placing the interests of the client ahead of
				the interests of any other party. In a real estate transaction, when a real
				estate salesperson is employed as an agent, the salesperson is obligated to
				negotiate the best price and terms for his or her client.
What is a Customer?
A customer is a person who is provided services by a real
				estate broker, but who is not a client of the broker. In this case, the real
				estate licensee is not acting as an agent. The actual services you receive from
				a real estate broker depend on the arrangement that is established between you
				and the licensee. The different types of real estate agreements are described
				below.
There are basically three types of real estate brokerage
				relationships that can be established between the consumer and a real estate
				licensee: Single agency, limited consensual dual agency, and a transaction
				brokerage arrangement.
Transaction Brokerage
Transaction brokerage describes a brokerage arrangement whereby
				the real estate licensee assists one or more parties, who are customers, in a
				contemplated real estate transaction, without being the agent, fiduciary, or
				advocate of that party to the transaction. This means that real estate brokers
				and salespeople can act as intermediaries between buyers and sellers. With this
				type of brokerage arrangement, home buyers and sellers are customers and not
				clients of the licensees with whom they are working. The basic function of the
				licensee is to bring buyers and sellers together so that a real estate sale can
				be completed. Sellers will employ the licensee to help market their real estate
				by identifying qualified buyers and showing their properties to prospective
				purchasers. This will usually also involve advertising properties for sale in
				newspapers and other media. Sellers will commonly also rely on the expertise,
				experience, and advice of the real estate licensee to help make their property
				ready for sale and determine an appropriate asking price. Buyers, in turn, rely
				on the services of brokers to find and show them suitable real estate that they
				can afford and have the desired characteristics. Real estate professionals may
				also help consumers obtain mortgage financing as well as assist them with
				finalizing the real estate sale and recording the deed and other documents
				associated with the sale.
Transaction brokerage arrangements are usually best suited for
				consumers who are primarily interested in the marketing services and expertise
				that can be provided by real estate professionals, but who do not need an agent
				to represent them in the negotiations for the sale or purchase of real estate.
				Under transaction brokerage, the licensee must provide brokerage services to
				all parties honestly and in good faith and avoid showing favoritism to either
				buyer or seller. Alabama law also requires all licensees exercise reasonable
				care and skill when providing brokerage services, answer all questions
				completely and accurately, and present all written purchase offers to sellers
				promptly and in a truthful manner.
Licensees must also keep confidential any information given to
				them in confidence, unless disclosure of this information is required by law.
				For sellers, this means that licensees must answer a buyer's questions about
				the condition of the property completely and honestly. In addition, the buyer
				must be told about any hidden defects known to the licensee that could affect
				the health or safety of occupants.
Single Agency
A single agency arrangement describes a relationship whereby
				the real estate licensee represents only one party in a real estate sales
				transaction. In the case of a single agency brokerage arrangement, the real
				estate licensee represents either the buyer or the seller, but not both parties
				to the real estate transaction. This type of brokerage arrangement is most
				appropriate for consumers who need the advice and negotiating skills of real
				estate professionals in addition to their marketing services. If a seller
				enters into a single agency agreement with a real estate broker, the broker is
				referred to as a seller's agent. Under this arrangement the broker must
				represent only the seller in the negotiations with buyers. Here the broker will
				seek the highest possible price and best possible sale terms for the seller.
				This type of brokerage arrangement can involve the use of subagents, especially
				in situations where properties are marketed through a multiple listing
				service.
Subagents are empowered to act for another broker in performing
				real estate services for that broker. The subagent owes the same duties to the
				broker's client as the broker. If a broker is an agent of the seller, then the
				subagent is also the seller's agent. When examining properties advertised
				through a multiple listing service it is important for buyers to determine
				whether the licensee that is showing them properties is acting in the capacity
				of a transaction broker, seller's agent or as a subagent of the seller.
Buyers should exercise care with respect to the information
				they reveal to licensees working as seller agents. For example, if you are the
				customer it would not be wise to tell a licensee the maximum price you would be
				willing to pay for a particular property when considering making a formal
				purchase offer. If you are the customer, the broker's primary responsibility is
				to the seller. In this case, the licensee, as the seller's agent, must convey
				such information to the seller.
A buyer's agent describes a real estate licensee who is
				employed by and represents only the buyer in a real estate transaction. This
				relationship is created by a written contract. This contract should clearly
				state the service the agent will perform for the buyer as well as specify how
				the licensee is paid for services rendered in connection with the real estate
				sale. In this case, the buyer is the client or principal and the real estate
				broker is the agent of and represents the buyer in dealings with
				sellers.
This type of real estate brokerage agreement should be used
				when the buyer needs guidance and representation when negotiating with sellers
				to purchase real estate. Buyers moving to a new location and who are unfamiliar
				with local market conditions would be those consumers most likely to benefit
				from this type of agency arrangement. It is becoming increasingly common in
				multiple listing situations for the selling broker (a licensee working with and
				showing properties to the buyer) to be an agent of the buyer and the listing
				broker to represent the owner-seller. Here, both the buyer and seller, working
				through their respective agents, could negotiate at arm's length with the
				benefit of professional help.
Limited Consensual Dual Agent
Limited consensual dual agency is an agency relationship where
				the real estate brokerage company represents both the buyer and the seller in
				the same real estate transaction. Consensual dual agency requires the licensee
				to obtain the written consent of both the buyer and the seller to act as their
				agent. The two most common circumstances where dual agency is encountered are
				(1) when two or more salespersons licensed under the same brokereach represent
				a different party to the transaction, and (2) when one licensee represents both
				the buyer and seller in the same sales transaction.
One major advantage of limited consensual dual agency is that
				it allows broader marketing opportunities than single agency arrangements. With
				this type of contract, salespeople can show houses of owners that they
				represent as agents to their buyer clients. Consensual dual agency is common in
				the larger real estate markets where real estate companies often have a large
				number of properties listed for sale. Many of these properties may be desirable
				to their buyers. With a dual agency agreement, these properties can be shown to
				their buyer clients.
In the case of dual agency, the principle function of the
				licensee is to help both parties reach mutually satisfactory outcome to their
				negotiations. The dual agent must avoid showing favoritism to either party and
				refrain from revealing confidential information that could prove detrimental to
				one side or the other. Although buyers and sellers may not benefit from the
				full range of services or agent loyalty that could otherwise be provided with a
				single agency arrangement, consensual dual agency does offer consumers more
				assistance and guidance than would be possible under a transaction brokerage
				arrangement.
When considering signing a dual agency agreement, it is very
				important that you talk with the broker to determine the types of services that
				will be provided, and what types of information you will share with the broker
				and broker's other clients.
Conclusion
After reading this consumer information booklet, you should
				sign a brokerage agreement that contains a statement of the services to be
				provided by the real estate professional. Remember, if you do not sign a
				brokerage agreement, by law, the licensee working with you will be considered a
				transaction broker. Ask your real estate licensee to clarify and explain
				anything in this booklet that you do not fully understand before signing a
				contract for real estate brokerage services. You are encouraged to sign the
				disclosure form and retain a copy for your records.
THIS IS FOR INFORMATION PURPOSES
THIS IS NOT A CONTRACT
REAL ESTATE BROKERAGE SERVICES DISCLOSURE
*Alabama law requires you, the consumer, to be informed about
				the types of services which real estate licensees may perform. The purpose of
				this disclosure is to give you a summary of these services.
A SINGLE AGENT is a licensee who represents only one party in a
				sale. That is, a single agent represents his or her client. The client may be
				either the seller or the buyer. must be completely loyal and faithful to the
				client. A single agent must be completely loyal and faithful to the
				client.
A SUBAGENT is another agent/licensee who also represents only
				one party in a sale. A subagent helps the agent represent the same client. The
				client may be either the seller or the buyer. A subagent must also be
				completely loyal and faithful to the client.
A LIMITED CONSENSUAL DUAL AGENT is a licensee for both the
				buyer and the seller. This may only be done with the written, informed consent
				of all parties. This type of agent must also be loyal and faithful to the
				client, except where the duties owed to the clients conflict with one
				another.
A TRANSACTION BROKER assists one or more parties, who are
				customers, in a sale. A transaction broker is not an agent and does not perform
				the same services as an agent.
*Alabama law imposes the following obligations on all real
				estate licensees to all parties, no matter their relationship:
1. To provide services honestly and in good
			 faith;
2. To exercise reasonable
			 care and skill;
3. To keep
			 confidential any information gained in confidence, unless disclosure is
			 required by law or duty to a client, the information becomes public knowledge,
			 or disclosure is authorized in writing;
4. Present all written offers promptly to the
			 seller;
5. Answer your questions
			 completely and accurately. Further, even if you are working with a licensee who
			 is not your agent, there are many things the licensee may do to assist you.
			 Some examples are:
1. Provide information
			 about properties;
2. Show
			 properties;
3. Assist in making a
			 written offer;
4. Provide
			 information on financing. You should choose which type of service you want from
			 a licensee, and sign a brokerage service agreement. If you do not sign an
			 agreement, by law the licensee working with you is a transaction broker.
The licensee's broker is required by law to have on file an
				office policy describing the company's brokerage services. You should feel free
				to ask any questions you have.
The Alabama Real Estate Commission requires the real estate
				licensee to sign, date, and provide you a copy of this form. Your signature is
				not required by law or rule, but would be appreciated.
***************************************************************
Name of licensee
				_______________________________________.
Signature ___________________________________________.
Date ______________________________________________.
Consumer name _____________________________________.
Signature _______________________________________.
(Acknowledgement for Receipt Purposes, Only)
Date ________________________________________.
Author:
Alabama Real Estate
				Commission