Members of the National Association of Exclusive Buyer Agents' (NAEBA) legislative task force and a new 20-member group called the Real Estate Agency Law Defenders (Realdefenders) are hoping to gather consumer and industry support to stop the Michigan legislation from passing voluntary designated agency in Michigan.

A similar law was recently shot down in Massachusetts because of agent resistance, say the two groups, and they hope that early preemptive strikes will produce the same result. So far, 26 states have passed some form of transactional brokerage or designated agency laws: Alabama, Arkansas, Colorado, Connecticut, Florida, Indiana, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Washington. New York, Ohio and Colorado are reviewing their laws.

The proposed law, according to the 26,000 + member Michigan Association of REALTORS® president Carol Frick, is designed to eliminate the inherent conflict of interest and confusion over who represents whom in the state's current dual agency statute, and would offer agents the ability to offer "exclusive" representation services under the supervision of their broker/managers.

There's the rub, say the dissenters. "There is nothing new for the consumer, there is no right to exclusive agency if the broker is assigning agents. Is the agent divorcing themselves from the company?" says Renee Knight, chairperson of Realdefenders. "That takes consumer rights away. They (consumers) think they are hiring the whole company when the other agents in the firm can be working against them."

Designated agency occurs when a home buyer is offered agency representation by the firm that is representing the seller of the same property. The firm designates one of its salespeople to act as the buyer's agent and another as the seller's agent, explains a NAEBA release.

Says NAEBA president Ron Henderson: "When a real estate firm tells a seller that it will attempt to sell his property for the highest price and also tells the buyer of the same property that it will attempt to get it for him at the lowest price, a conflict of interest is created."

"Let there be no doubt," Henderson adds, "designated agency represents a conflict of interest. And designated agency is all about money, not service."

Ray Wilson, chair of legislative task force for Naeba.com and author of "Bought, not Sold," says there are three issues at hand:

1. designated agency offers nothing that isn't already available under common law
2. It is nothing more than a new label for dual agency
3. This kind of legislation is part of a set of legislative modifications that no one ever thought was needed before the emergence of buyer agency, so designated agency is an attempt to reduce the attractiveness of buyer agency to consumers.

Wilson says that the task force is growing and is being supported by an unexpected source, traditional practitioners and members of the Macomb Board of Realtors (metro Detroit.)

Mary Lou Laporte is a traditional agent and serves on Macomb's Board of Directors. When introduced to the Michigan group, she wrote, " I practice conventional real estate I am very concerned about our relationship to the public through agency and disclosure. Designated agency is misleading, confusing and not even good for the broker, let alone the consumer or practitioner."

Tom Wemett, chairperson, Legal/Legislative Action Committee offers the following. "On page five Section IV of the NAR Legal Liability Series (first edition 11/86) under the "Duties Owed by an Agent to His Principle (Loyalty, Obedience, Disclosure, Confidentiality, Reasonable care and diligence, Accounting) I need only quote in order to out the inherent flaws of designated agency."

""Loyalty- A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his principle. This duty obligates a real estate broker to act at all times solely in the best interests of his principle to the exclusion of all other interests, including the broker's self interest. A corollary of this duty of loyalty is a duty to avoid steadfastly any conflicts of interest that might compromise or dilute the broker's undivided loyalty to his principal's interests. Thus, a real estate broker's duty of loyalty prohibits him from accepting employment from any person whose interests compete with, or are adverse to, his principle's interests,"" writes Wemett.

Mike Morin, also a member of the legislative action committee, is a Maryland real estate broker who has just completed the bar exam and plans to open a civil practice as a plaintiff's attorney in real estate law shortly. "As a former military officer, I am flabbergasted how people can be confused about undivided loyalty," he says. "Loyalty is undivided - there isn't any other type."

"Admit you are a salesperson and admit it publicly," challenges Morin. "But if you are going to perpetuate the myth that you are a fiduciary, you have to at least perform some fiduciary functions and they (the proponents of designated agency) are trying to avoid the most critical - loyalty. What if I approached you as an attorney and tried to sell you designated agency?"

"As an attorney, I am looking forward to designated agency," he grins.

The real issue revolving around agency practices may boil down to the legal interpretation of one simple word - loyalty.

Part II - Michigan's President Speaks Out - an exclusive interview with Carol Frick, MAR's president.