Dual Agency, Informed Consent and Agency Disclosure as a Remedy

Written by Posted On Tuesday, 20 August 2019 05:00

Agency disclosure Laws were first passed in California...as a compromise.

Getting agency disclosure legislation enacted in California was

about a 12-year process. There was some serious talk of outlawing dual agency in the 1970s and three legislative proposals began their way through the legislative process. One of the three proposals would have made dual agency a criminal offense. The California Association Realtors worked closely with consumer lobbying groups and legislators. Over the next eight years the CAR and legislators developed a compromise bill.

The compromise did not outlaw dual agency, which was a very common, and some would say disclosed practice (and others would say undisclosed). The compromise made California real estate licensees disclose agency relationships in residential acquisitions. The reasoning was, that if buyers and sellers truly

understood the options available to them, they would choose the representation that was in their own best interests.

In 1986 the California legislature passed the agency disclosure law unanimously. The legislature granted the real estate industry a grace period until the beginning of 1988 to prepare to implement the disclosure law. The California legislature mandated that persons selling residential real estate must give

agency disclosure information to the parties involved in real estate transactions. This information must include the possible agency relationships that the real estate firms involved in the transaction may have with their clients.

When the agency law took effect the real estate business was in a definite upswing and a sellers' market. Licensees busy scrambling to market properties did not have time to worry about agency -- they were too busy making money! Unfortunately, even today few people in the real estate industry understand agency disclosure.

Prior to 1989 (or 1990...these details elude me), an MLS operating under NAR's Model MLS Rules was (among other things...but this was primary) a "unilateral offer of sub agency." Everyone worked for, was the agent of, the seller by virtue of the MLS. It was unilateral and automatic.

The only way a "cooperating broker" MLS subscriber (the MLS member...the participating broker) could get out of being a sub agent was to "refute the unilateral offer of sub agency."

Attorneys I have discussed this with over the years (including extensive conversations with Alex Creel of the California Association of REALTORS Legal Staff during 1986-88 when the California Agency Disclosure Requirement was being enacted...and with my partner, Mr. Agency himself, John Reilly many times over the last few years and, coincidentally, at lunch today), had no consensus as to how "refuting the unilateral offer of sub agency" could be accomplished. Besides, why would one want to be anything but a sub agent...that was the way it was always done.

Then, in 1988, the California Agency Disclosure Requirement placed California REALTORS in danger of making disclosures that they were "representing the buyer exclusively" while at the same time they were already agents of the seller because of the NAR MLS Model Rules, with not even the slightest clue that "refuting the unilateral offer of sub agency" was even required...and even if they knew it was required, no one could tell them how to do it.

It was obvious to those of us who were students of this issue that something had to be done with the NAR Model Rules. As I recall, NAR was reluctant at first to change the MLS Model Rules. CAR then created and adopted what was referred to as the CAR Model Rules, which changed an MLS from a "unilateral offer of sub agency" to a "unilateral offer of compensation, sub agency optional." Sandicor, the San Diego Regional MLS, was one of the first MLSs in California, if not the first, to adopt the CAR Model Rules.

In 1992 I traveled with associates representing the California Association of Buyer's Agents to Boston to see if Ralph Nadar would take up our cause...he wouldn't. His position was that there was no consumer demand for changes to the agency laws in real estate, and he did not want to spend any of his social and politica capitaql on something consumers did not care about. Some of us in the Industry cared about it, but consumers did not.

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Saul Klein

In 1948, doctors told my father that his life aboard submarines on war patrol in the South Pacific and the depth charging he experienced had rendered him sterile. Although controversial and not widely applied, he was treated with an Ayurvedic therapy called “shivambu.” If you are unfamiliar with this term, I recommend you Google it because against all odds, I came to exist.

That was a loony segue into my life but is a fitting precursor to a career that would be just as incredible.

Like my father, I joined the Navy. However, due to a medical inconvenience, I was honorably discharged after 6 years of commissioned service, all on Sea Duty. This was an opportune misfortune that led me down the path to a successful career in real estate. Both my father and grandfather flirted in real estate brokering and flipping part-time, and I followed suit but making a lifelong career out of it.

With over 40 years in real estate, it is impossible to talk about my experiences in this small window. But I can proudly say that I am well-recognized as an industry pioneer, especially in real estate syndication and education, and one of the few luminaries that paved the way for real estate’s transition to the online world.

Some highlights of my life’s work:
● Co-created ePRO, technology certification course that certified 70,000 students
● Created the first online communities for real estate professionals to network, learn, and sell
● Created "Opt Out" Listing Syndication, aggregating over 1.4 Million Listings in 18 months
● Built the #2 National Listing Syndication Service, Point2 Technologies, sold to Yardi in 2010
● Founder of the California Association of Buyer’s Agents
● Member of the first REALTOR.com Team, pre-IPO, responsible for obtaining first 500,000 listings
● Helped Zillow and Trulia build up their MLS data inventory

Today I continue to lead efforts that bring new technologies to the real estate industry. Feel free to reach out and learn more.

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