© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure1 New York Real Estate for Brokers, 5th e By Marcia Darvin Spada Cengage Learning

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure2 Chapter 2 Real Estate Agency Disclosure

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure3 Chapter 2 Key Terms  Advance informed consent to dual agency  Agent  Broker’s agent  Buyer’s agent  Buyer brokerage  Client  Customer  Disclosure  Dual agent/dual agency  Estoppel  Exclusive-right-to- sell  Express agency  Fiduciary/fiduciary duties

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure4 Chapter 2 Key Terms (continued)  First substantive contact  General agent  Implied agency  Informed consent  Open listing  Principal  Seller’s agent  Single agent  Special agent  Subagent  Undisclosed dual agency  Undivided loyalty  Vicarious liability

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure5 Agency Relationships Principal Customer Agent

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure6 Fiduciary Responsibilities  Obedience  Loyalty  Disclosure of information  Confidentiality  Accountability  Reasonable Care, Skill, and Diligence

© 2013 All rights reserved. Misrepresentation  A false representation of a material fact  A person making the false representation knew or should have known it to be false  A person acts or does not act based on the misrepresentation  A person who relies on the misrepresentation in acting or not acting Chapter 2 Real Estate Agency Disclosure7

© 2013 All rights reserved. Duties of the Principal to the Agent The agent should not be liable if the principal withholds information that causes the agent to make incorrect representations to third parties Chapter 2 Real Estate Agency Disclosure8

© 2013 All rights reserved. Latent Defects Hidden or concealed defects that cannot be discovered by ordinary examination or inspection Buyers may accuse the inspector of failing to notice the problem A leaky sewer pipe may cause damage to a number of property components Chapter 2 Real Estate Agency Disclosure9

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure10 Types of Compensation Percentage of final sales price Legal Flat fee paid by seller or buyer Legal Net listing Illegal Franchise fee Legal Kickback to non-licensed parties Illegal Referral fees to other licensees Legal

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure11 Creation of Agency AGENCY AGREEMENT Implied Actions of the parties Express Oral or written

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure12 Agency Alternatives  Broker’s agent  Buyer Agent  Cooperating agent  Designated agent  Dual Agency  Seller agent  Single agent  Subagent

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure13 Definition of Dual Agent An agent who is acting as a buyer’s agent and a seller’s agent in the same transaction Buyers and sellers may consent to dual agency in advance of it occurring by indicating consent on the agency disclosure form

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure14 Dual Agency Designated agent Consensual/ Informed consent Undisclosed Intended Unintended

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure15 Designated Agent Definition A salesperson or associate broker, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction.

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure16 Designated Sales Associate The designated sales associate and representative broker cannot provide the fiduciary duty of undivided loyalty. Both disclosure forms include a section on “dual agent with designated sales associates”

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure17 Buyer Agency Fiduciary relationship with buyer Compensation from buyer/ seller or both Buyer client Buyer as customer

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure18 The Listing Agreement  Exclusive-right-to- sell  Exclusive agency  Open listing  Exclusive-right-to- rent  Exclusive-right-to represent ( buyer agency)

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure19 The Agency Disclosure Form Sale or rental of 1-4 unit residential properties and condos and coops in any size building Informs consumers of their agency relationship and choices Used at the first substantive contact or for advance informed consent to dual agency

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure20 Two separate agency disclosure forms required  one for seller/buyer transactions  another for landlord/tenant transactions

© 2013 All rights reserved. Other Types of Disclosure  Agency  Agricultural districts  Electrical service  Lead-based paint  Mold  Property condition  Radon  Stigmatized Property  UFFI  Utility surcharge  Uncapped gas wells Chapter 2 Real Estate Agency Disclosure21

© 2013 All rights reserved. Stigmatized Property Disclosure  Occupants who have AIDS or other illnesses not transmitted through occupancy  Properties that were a site of death due to natural causes, accidents, suicide, homicide, crime, and other reasons Chapter 2 Real Estate Agency Disclosure22

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure23 What is a natural gas well?  A natural gas well is a type of well that is dug or drilled that yields or has yielded natural gas.  Three types:  Oil wells  Natural gas wells  Condensate wells

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure24 Dangers of Uncapped Wells FFalling in LLeakage of gas CCombustion/Explosion

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure25 Disclosure Requirements for uncapped natural gas wells Disclosure is made before buyer and seller enter into a contract of sale Seller must disclose to buyer the existence of any uncapped natural gas wells on the property of which the seller has actual knowledge Cost of capping should not be passed to new property owner

© 2013 All rights reserved. Chapter 2 Real Estate Agency Disclosure26 The Well Head Mounted at the opening of the well to regulate and monitor the extraction of hydrocarbons from underground Prevents leaking of oil or natural gas out of the well Prevents blowouts due to high pressure formations Source: NETL – DOE