Today, the Connecticut state senate will vote on HB6981, a bill to allow designated agency in real estate transactions. The National Association of Exclusive Buyer Agents (NAEBA) has been lobbying to stop the bill in the belief that it will harm consumers. According to NAEBA spokespersons, the bill will distance consumers from their right to full representation in the real estate transaction.

Designated agency occurs when a single real estate office promises both buyer and seller in the same transaction that the firm will fully represent both sides at the same time. For example, the seller is promised that the firm will negotiate for the highest price. Simultaneously, the firm pledges to the buyer that it will negotiate on his behalf for the lowest price.

"This extreme conflict of interest has been consistently outlawed throughout the body of agency case law," says NAEBA Executive Director Kathleen Chiras. "HB6981 sweeps this public protection away, and effectively converts what yesterday was fraud, to the status of law."

According to NAEBA members, the proposed law is "written by lobbyists representing the interests of large real estate companies, and it brilliantly disguises its real purpose."

"Although its purpose is not readily apparent, this legislation is designed to do nothing more than increase the market share of large real estate companies at the expense of consumers," charges John Herman, president of the Connecticut Association of Exclusive Buyer Agents. "Once state senators understand this bill for what it really is, they will be angry that it was ever presented to them. Purely and simple, this is bad law that must be defeated."

If passed in Connecticut, says Chiras, HB6891 would supersede the state's real estate licensing law. It would do so by establishing irreconcilable conflict with present real estate code and by promoting terminology that misrepresents the proposed law's true intent to the public. In addition NAEBA points out that the proposed legislation is inconsistent with the common law of agency, which should be the guide when real estate legislation is considered.

"It erodes the protections provided by existing agency law and encourages misrepresentation of services. Common law has protected the consumer well for hundreds of years in the legal profession and other fiduciary situations. It should be considered as the guide for real estate as well," emphasizes Chiras.

Action by NAEBA and Ralph Nader's consumer group, prevented a similar bill from being passed in the Massachusetts legislature. Herman has put up a Web site called AgencyLaw.com to educate consumers and legislators about the law of agency.

"Consumer advocates in that state were able to reveal what the bill was really about in time, and the Massachusetts legislature promptly killed it," says Chiras.

NAEBA has sent letters to all 36 Connecticut state senators urging them to vote against the bill because of its anti-consumer nature. The letters ask the senators to contemplate the answers to two key questions:

• How is it possible for one real estate office to promise to represent the opposing interests of two clients in the same transaction without engendering a conflict of interest?
• Why should the legislature pass legislation that endangers the public in this way solely to support the self-serving motives of large real estate companies?

"It is up to the senate now," says Herman. "Some of our lawmakers have been lead to believe that there is no opposition to HB6891. That definitely is not the case."

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Published: May 12, 1999

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