Does This Constitute Representation
This article is equally interesting to the consumer that is buying or selling real estate as well as the real estate agent. Alabama License Law Section §34-27-36 (a) (7) states, “Acting for more than one party in a transaction without the knowledge and consent in writing of all parties for whom he or she acts.” There are several ways this law can be violated but I will only discuss a couple. Keep in mind that it is the real estate commission that determines if a particular instance violates a particular law. In many cases if one law is violated, an additional violation may also be sited. If fines are assessed, they are applicable to each violation. For example; If a person violates the above law, they are also violating Section 34-27-36 (a) (19) which states, “Violating or disregarding any provision of this chapter or any rule, regulation, or order of the commission.” Wow! This includes everything in the Alabama License Law.
With that in mind let’s examine how someone can act for more than one party in a transaction. Let’s say that I have a property listed and have marketed that property with various types of media and have placed a for sale sign on the property. You are a prospective buyer. You call me wanting to view the property. I meet you at the property and before I disclose your “rights” you engage conversation with me about the property. You begin asking specific questions about the property. In return, I answer those questions in a roundabout way. The big question at this point is who do I represent; the seller or you, the buyer? The answer is I represent the seller. At this point you, the buyer, is not represented by anyone. This is a huge issue for any buyer. Everyone buying or selling real estate in Alabama has a right to be represented and needs to have representation in the buying or selling process.
Many people think they are being represented by the agent that is showing them the property when in fact they aren’t. Before a consumer can be represented they must sign an “Agency Agreement” selecting the type service they want. Section §34-27-82 (b) of the Alabama License Law states, “ At the initial contact between a licensee and the consumer and until such time a broker enters into a specific written agreement to establish an agency relationship with one or more of the parties to a transaction, the licensee shall not be considered an agent of the consumer. An agency relationship shall not be assumed, implied, or created without a written bilateral agreement establishing the terms of the agency relationship.” There are various types of agency relationship that I will cover individually in following blogs.
To continue with our example, let’s say that when I met you at the property I disclosed your rights to have representation and you chose to sign a buyer’s agency agreement with me. I am now considered an agent, and representative for your best interest. I already represent the seller and now I also represent you, the buyer? Can I legally represent both? Yes I can but let’s visit Alabama law to see specific conditions. Section §34-27-81 (11) states, “ Limited Consensual Dual Agent is a licensee who, with the written informed consent of all parties to a contemplated real estate transaction, is engaged as an agent for both the buyer and seller. Circumstances which establish dual agency include, but are not limited to, one of the following:
- When two or more licensees licensed under the same broker each represent a different party to the transaction.
- When one licensee represents both the buyer and seller in a real estate transaction.
As you see an agent can represent both the buyer and seller but only with prior, written consent from both the buyer and the seller. I have personally represented both the buyer and seller in many transactions and have had no issues or concerns from either party. I represented both parties equally. I dealt only with factual information and didn’t allow myself to state my opinion. Isn’t this the way you want to be represented by a real estate agent? Using only facts and eliminating all opinions.
The key point in this blog that consumer’s need to remember is to know for certain that you are represented and the type representation you have. The key point to real estate agents is that consumers buying or selling real estate in Alabama have a legal right to be represented. It is your responsibility to disclose these rights to the consumer as soon as possible.
I hope you will follow my blogs to see the various types of agency relationships explained. Should you have specific questions concerning various issues, please let me know and I’ll research the answer for you. I also want to encourage you to subscribe to our “News & Updates” weekly report so you can stay abreast of issues that might affect you when buying or selling real estate. If you haven’t visited my website, please go to www.AlabamaRealEstateInstitute.com and view previous articles.