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Weekly Q&As

Can my buyer-client buy a property listed by one of my provisional brokers?

Release Date: 03/21/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: I am the broker-in-charge of a small firm. There are four other brokers in my firm, one of whom is a provisional broker. The provisional broker has a home listed for sale and the seller agreed to dual agency in the listing agreement. I have some buyer clients that are interested in looking at the home. The provisional broker told me that she learned in her post-licensing classes that a broker-in-charge cannot represent a buyer interested in purchasing a home listed by a provisional broker under his or her supervision. Is she correct?

ANSWER:  She is not. We suspect that your provisional broker misunderstood her instructor's discussion of the Real Estate Commission's Agency Agreements and Disclosure Rule (58A.0104). Subsection (j) of that rule deals with designated agency. It authorizes a real estate firm, with the prior express approval of both parties, to designate one or more agents to represent only the interests of the buyer, and one or more agents to represent only the interests of the seller.

There is a caveat to the designated agency rule that is described in the last sentence of subsection (j). It states: "A broker-in-charge shall not act as a designated broker for a party in a real estate sales transaction when a provisional broker under his or her supervision will act as a designated broker for another party with a competing interest." The reason for this exception is that, since the broker-in-charge has a duty to supervise the provisional broker, the BIC must have access to all information in the provisional broker's possession, including any confidential information. The Real Estate Commission has written: "the broker-in-charge's mandatory supervisory obligations of provisional brokers in his or her office defeat the necessary separation required between designated agents."   

What is important to recognize is that the exception here applies only in the context of designated agency. If both parties agree to "regular" dual agency, i.e. they have not exercised the designated agency option,  those parties can be represented by a single agent. Therefore, it is also permissible for one party to be represented by a provisional broker and the other by the provisional broker's broker-in-charge.

 

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