In Florida, real estate organizations are coming to legal blows over the interpretation of the state's new "non-disclosure" law. Are licensees and consumers caught in the middle?

In the most unfriendly blow to consumer-friendly representation yet on record, the Florida legislature passed a new law which the Florida Association of REALTORS® had initiated in an attempt to completely eliminate agency disclosure. Recognizing the regressive ramifications and adverse affects on both licensees and consumers, the Department of Business and Professional Regulation introduced amendments which postponed disclosure requirements from the time of first contact to the time of listing or showing properties. That compromise amounted to what has been described as a seduction period. FAR readily accepted the compromise and successfully lobbied to have the bill unanimously passed in the legislature.

FAR is now backpedaling, saying that the new law does not require disclosure to parties whom licensees do not intend to represent. However, on the heels of the new law taking effect Oct.1, 1999, the DBPR issued its own interpretation that consumers should all be given a form that addresses representation. The DBPR directed the Division of Real Estate and Attorney General's office to announce that, since the Notice of Nonrepresentation no longer exists, real estate licensees must instead give a Transaction Broker or Single Agent Notice to all consumers. Chief prosecutor of the Division of Real Estate Daniel Villazon announced that failure to follow the directive will result in a $100 fine.

Objections have been raised by licensees who fear that handing out the new notices will only cause confusion among consumers who will be non-represented. The DBPR responded by suggesting that licensees simply cross off language that does not apply or prepare their own disclosures, including the "important notice" spelled out in statute. Meanwhile, DBPR is working on a new form which would eliminate the need to deface the Single Agent or Transaction Broker Notices provided in the revised statute.

The majority of Florida licensees, especially in large firms, function as Transaction Brokers and provide what statute describes as non-agency, non-fiduciary "limited representation." Rather than informing consumers about Single Agent, fiduciary services offered by competitors, especially buyer agents, those groups were assisted by PAC money from both the Florida and the National Association of Realtors and lobbied to get all disclosures eliminated. In response to DBPR's contrary interpretation of the revised statute, FAR attorneys filed an administrative challenge against the DBPR on October 18, 1999. An administrative law judge will make a ruling over whether or not the DBPR has the authority to require licensees to provide written disclosure to individuals they do not intend to represent. FAR has also turned to the Florida Real Estate Commission to render its interpretation of the new law.

Objections have been raised by licensees who fear that handing out the notice will only induce confusion in consumers who are non-represented. The DBPR responded by suggesting that licensees simply cross off language that does not did not apply. Meanwhile the DBPR is working on a new form which would eliminate the need to deface the notices.

In response, FAR attorneys filed an administrative challenge against the DBPR on October 18, 1999. An administrative law judge will make a ruling over whether or not the DBPR has the authority to require licensees to provide written disclosure to individuals they do not intend to represent. FAR has also turned to the Florida Real Estate Commission to render its interpretation of the new law.

With the court decision expected to take weeks or months, and the FREC looking into the issue by the end of the year, licensees are left wondering whether they should follow DBPR's directive or not. Some brokers are using the old notice until further notice.

FAR President C.D. Boring was quoted in a recent news report as saying, "The whole purpose of HB 417 ( the new law) was to eliminate an unnecessary disclosure form, not create a new one and certainly not bring back an old one."

What do you think? Should consumers, whether or not the licensee intends to represent them, be informed of the nature of agency and non-agency relationships?

Published: October 20, 1999

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