The New Normal in Oklahoma Brokerage Relationships

The New Normal in Oklahoma Brokerage Relationships
11/27/ :15 AM The New Normal in Oklahoma Brokerage Relationships © Copyright, Oklahoma Real Estate Commission, 2013 by Bruce H. Aydt, DSA, ABR, CRB, GRN, SFR, SRS © 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Review of Exercise Definitions
Branch Office – OREC Rules 605:10-1-2 An extension of a broker’s main office location and normally is located at a different location than the main office. A branch office shall not be independently owned by any person other than the broker requesting the extension of office location. Party – Section (3) A person who is a seller, buyer, landlord, or tenant or a person who is involved in an option or exchange. Materials Page 4 © Copyright, Oklahoma Real Estate Commission, 2013

Advertising – OREC Rules 605:10-1-2 All forms of representation, promotion and solicitation disseminated in any manner and by any means of communication, to include social networking, to consumers for any purpose related to licensed real estate activity. Materials Page 4 © Copyright, Oklahoma Real Estate Commission, 2013

Brokerage Services Agreement OREC Rules 605:10-1-2 An oral or written agreement to provide brokerage services entered into by a real estate broker and a person who is a party to a real estate transaction and shall include, but not be limited to, listing agreements, buyer broker agreements and property management agreements. Materials Page 4 © Copyright, Oklahoma Real Estate Commission, 2013

Additional Definitions Licensee Handout
© Copyright, Oklahoma Real Estate Commission, 2013

Duties and Responsibilities
Duties are owed to a “party”. “Party” is defined as “a person who is a seller, buyer, landlord, or tenant or a person who is involved in an option or exchange.” Materials Page 6 © Copyright, Oklahoma Real Estate Commission, 2013

Duties and Responsibilities
Duties are mandatory and may not be waived unless otherwise provided. Duties and responsibilities listed on Page 6. KEY POINT: When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Materials Page 6 © Copyright, Oklahoma Real Estate Commission, 2013

What Duties are Owed to Whom? Tips to Guide Licensees
Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

Duties - Tips to Guide Licensees
Remember that duties and responsibilities are owed to a “party”. Remember that a “party” is defined as “a person who is a seller, buyer, landlord, or tenant or a person who is involved in an option or exchange.” “Brokerage services” are defined as “those services provided by a broker to a party in a consumer transaction.” Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

Two duties are provided ONLY to parties for whom the broker is providing “brokerage services”: Inform the party in writing when an offer is made that the party will be expected to pay certain costs, brokerage service costs and approximate amount of the costs. Keep the party informed regarding the transaction. Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

ALL other duties are owed to ANY AND EVERY party whether or not you are providing brokerage services to that party. These duties CANNOT be waived. Treat all parties with honesty and exercise reasonable skill and care. Keep confidential information received from a party or prospective party confidential. Confidentiality detailed further in course. Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

These duties CANNOT be waived. Disclose information pertaining to the property as required by the Residential Property Condition Disclosure Act. Comply with all requirements of the Oklahoma Real Estate License Code and all applicable statutes and rules. Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

These duties CAN be waived in writing by a party. Receive all written offers and counteroffers. Reduce offers or counteroffers to a written form upon request of any party to a transaction. Present timely all written offers and counteroffers. Materials Page 7 © Copyright, Oklahoma Real Estate Commission, 2013

Duty of Confidentiality

The Duty of Confidentiality
Confidential information shall not be disclosed without the consent of the party disclosing unless Written consent to disclose the information is given; The disclosure is required by law; or The information is made public or becomes public from a source other than the broker. Materials Page 9 © Copyright, Oklahoma Real Estate Commission, 2013

The ONLY confidential information is: That a party or prospective party is willing to pay more or accept less than what is being offered. That a party or prospective party is willing to agree to financing terms that are different from those offered. The motivating factor of the party or prospective party; AND Materials Page 9 © Copyright, Oklahoma Real Estate Commission, 2013

The ONLY confidential information is: Information specifically designated as confidential by a party unless such information is public. Materials Page 9 © Copyright, Oklahoma Real Estate Commission, 2013

Confidentiality Exercise

Scenario #1 You are a listing broker. The seller tells you that, although the listing is priced at $225,000, the seller will accept $185,000. Should this information be disclosed to the buyer?  Must not disclose-confidential  May disclose-not confidential  Must disclose-required to disclose Materials Page 10 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #1 - Answer You are a listing broker. The seller tells you that, although the listing is priced at $225,000, the seller will accept $185,000. Should this information be disclosed to the buyer?  Must not disclose-confidential Section (A)(6)(a): 1. Information given by a party to the licensee. 2. Price position is confidential. Materials Page 10 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #2 You are a broker working with a buyer. You do not have a written agreement with the buyer, but you have been working with the buyer on several properties over the last 6 weeks. The buyer has decided they want to write an offer on a property listed with another broker that is priced at $225,000. The buyer tells you that, although their first offer is going to be at $185,000, ultimately, they are willing to pay up to $220,000 if they need to. Materials Page 10 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #2 Should this information be disclosed to the listing broker?  Must not disclose-confidential  May disclose-not confidential  Must disclose-required to disclose Materials Page 10 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #2 - Answer Should this information be disclosed to the listing broker?  Must not disclose-confidential Section (A)(6)(a): 1. Information given by a party to the licensee. 2. Price position is confidential. Materials Page 10 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #3 You are a listing broker. You have been working with a buyer on other properties. The buyer wants to write an offer on your listing that is priced at $225,000. The buyer tells you that, although their first offer is going to be at $185,000, ultimately, they are willing to pay up to $220,000 if they need to. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #3 Should this information be disclosed to your listed seller?  Must not disclose-confidential  May disclose-not confidential  Must disclose-required to disclose Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #3 - Answer Should this information be disclosed to your listed seller?  Must not disclose-confidential Section (A)(6)(a): 1. Information given by a party to the licensee. 2. Price position is confidential. 3. In addition, Section (D) provides that when the licensee is working with both parties, all of the duties remain in place for both parties. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #4 You are a listing broker. The seller tells you that, they need a quick sale on the property because the female seller has been relocated to Indianapolis and they want to make sure their 2 children start a new school year at the beginning of the school year, which is now just 10 weeks away. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #4 Should this information be disclosed to the buyer?
 Must not disclose-confidential  May disclose-not confidential  Must disclose-required to disclose Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #4 - Answer Should this information be disclosed to the buyer?  Must not disclose-confidential Section (A)(6)(c): 1. Information given by a party to the licensee. 2. Motivating factors of a party are confidential. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #5 You are a listing broker. The seller tells you that they did not pay their real estate taxes the previous year, but that they have sufficient equity in the property to pay the previous and current year taxes. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #5 - Answer Should this information be disclosed to the buyer?  May disclose-not confidential-public info Section (A)(6): Confidential information shall not be disclosed … “unless …the information is made public or becomes public as a result of actions from a source other than the broker.” INSTRUCTOR NOTES: NOTE: This is NOT confidential information because it is public information. Thus it may be disclosed. It is not required to be disclosed because the seller can pay the taxes upon closing and the fact that the taxes are not paid is not a material title defect, impairment of the seller’s ability to perform the terms of the contract or required to be disclosed under the “Residential Property Condition Disclosure Act.” Section (A)(6) Confidential information shall not be disclosed … “unless …the information is made public or becomes public as a result of actions from a source other than the broker.” See also (A)(6)(d) If a party “designates” information as confidential, that information is confidential “unless such information is public.” Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #6 You are a listing broker. The seller tells you that they are “under water” with their loan balance and with the suggested list price of $189,000 that you have given them. They owe $210,000 on the property and are current in their mortgage payments. Because they are current, there are no defaults and no notices of foreclosure on the property. However, they have no other assets to pay the difference and will require a “short sale” to be able to close a transaction. …. Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #6 Assume the property is a residential property that is listed in an MLS and the MLS does not require disclosure of a potential short sale in the MLS. Also assume that the seller intends to have you disclose the need for the short sale when a buyer presents an offer because the purchase agreement will need to have appropriate contingencies and/or addenda to deal with the lender approval of the short sale. Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #6 Should this information be disclosed to the buyer or buyer’s broker upon first contact?  Must not disclose-confidential at this time  May disclose-not confidential at this time  Must disclose-required to disclose at this time Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #6 - Answer Should this information be disclosed to the buyer or buyer’s broker upon first contact?  Must not disclose-confidential at this time. Section (A)(6)(c): 1. Information given by a party to the licensee. 2. Motivating factors of a party are confidential. INSTRUCTOR NOTES: NOTE: At the time of the scenario, this would be considered a motivating factor to sell. Thus, Section (A)(6)(c) applies. However, since the short sale will, by necessity, need to be disclosed at the time the contract is accepted, the seller should be made aware that they will, ultimately, have to consent to disclosure of this information in order to even process the transaction as a short sale. Materials Page 11 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #7 You are a listing broker for a single family residential property. The seller tells you they have occasionally had a small amount of leakage in the basement, but tells you not to say anything to a buyer about it. You look on the Property Condition Disclosure Statement and there is no mention of the water leakage. Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #7 Should this information be disclosed to the buyer?  Must not disclose-confidential  May disclose-not confidential  Must disclose-required to disclose Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #7 - Answer Should this information be disclosed to the buyer?  Must disclose-required to disclose Disclosure is required by law; Section "Residential Property Condition Disclosure Act"; thus, it is not confidential. Section (A)(6) Confidential information shall not be disclosed “unless …the disclosure is required by law …” INSTRUCTOR NOTES: NOTE: This disclosure is required by law; Section "Residential Property Condition Disclosure Act"; thus, it is not confidential. Section (A)(6) Confidential information shall not be disclosed “unless …the disclosure is required by law …” Materials Page 12 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #8 You are working with a buyer without a written agreement. In the course of showing the buyer several homes, the buyer has told you that she will be making $125,000 per year, has a large amount of assets which are in the stock market and that she very much needs to live in the Greenacre neighborhood because her children have special education needs which can only be met through the Greenacre school district. They want to write an offer on a property not listed with your company. Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #8 - Answer Should this information be disclosed to the listing broker?  Must not disclose-confidential Section (A)(6)(c): 1. Information given by a party to the licensee. 2. Motivating factors of a party are confidential. Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #9 You are working with a buyer and have not entered into any brokerage services agreement to provide services other than required by the License Code. You have written an offer for a buyer that has been accepted. The property is not listed with your company. You have learned from the listing broker that the seller has accepted a back-up contract for several thousand dollars more than the offer you wrote. Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #9 - Answer Should this information be disclosed to the buyer?  Must disclose-required to disclose Section (A)(4) requires the licensee to keep the party for whom the broker is providing brokerage services “informed” regarding the transaction. Even though you do not have a brokerage services agreement, you are still providing brokerage services as defined by Section (2). Thus, to keep the buyer “informed” you would disclose this information to the buyer. INSTRUCTOR NOTES: VERY IMPORTANT NOTE: Section (A)(4) requires the licensee to keep the party for whom the broker is providing brokerage services “informed” regarding the transaction. Even though you do not have a brokerage services agreement, you are still providing brokerage services as defined by Section (2). Thus, to keep the buyer “informed” you would disclose this information to the buyer. EXCEPTION: If you had received the information directly from the seller, who is a PARTY to the agreement, then the information is arguably confidential under Section (A)(6)(c) because it deals with the seller’s motivating factors in this contract. There appears to be a clear statement in the duty of confidentiality that the duty is owed when the information is received “from a party or prospective party”. Section (A)(6). It is likely that the listing broker who gave you this information violated the duty of confidentiality to the seller because he/she received it from the seller, a party. However, since you received the information from the listing broker, that information has now been made public as a result of actions from a source other than the broker (you) and is not therefore confidential to you or the buyer. Section (A)(6). Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #10 A buyer tells you that she wants to write an offer with an FHA loan for the maximum limits. She also tells you that she can put down up to 30% and to a non-FHA loan if the house doesn’t work out on an FHA loan. She is interested in a listing of another broker. Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

Scenario #10 - Answer Should this information be disclosed to the listing broker?  Must not disclose-confidential Section (A)(6)(b): 1. Information given by a party to the licensee. 2. The fact that a party is willing to agree to financing terms different from those offered is confidential. Materials Page 13 © Copyright, Oklahoma Real Estate Commission, 2013

The In-House Sale Materials Page 14

The In-House Sale – Conflicts? - #1
You are a sales associate and have listing on a residential property. You and your broker have entered into an Exclusive Right to Sell Listing Agreement that includes only the duties specified by the License Code. Another sales associate in your firm is working with a buyer without a written agreement. The sales associate writes an offer for the buyer on your listing and presents it to you. Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

The In-House Sale – Conflicts?
What duties do you as a sales associate owe to the seller? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the seller? ALL specified in INSTRUCTOR NOTES: NOTE: The answer to all of these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage. Section (B). “When working with both parties to a transaction, the duties and responsibilities set forth in this section shall remain in place for both parties.” Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the buyer? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the buyer? ALL specified in Section (B) “When working with both parties to a transaction, the duties and responsibilities set forth in this section shall remain in place for both parties.” INSTRUCTOR NOTES: NOTE: The answer to all of these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage. Section (B). Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

What duties does the sales associate assisting the buyer owe to the buyer? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties does the sales associate assisting the buyer owe to the buyer? ALL specified in Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties does the sales associate assisting the buyer owe to the seller? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

What duties does the sales associate assisting the buyer owe to the seller? ALL specified in Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

Are any of these answers different if this is a commercial sale transaction? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

Are any of these answers different if this is a commercial sale transaction? No. Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

Are any of these answers different if this is a commercial or residential lease transaction? Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

Are any of these answers different if this is a commercial or residential lease transaction? No. Materials Page 14 © Copyright, Oklahoma Real Estate Commission, 2013

You are a sales associate and have listing on a residential property. You and your broker have entered into an Exclusive Right to Sell Listing Agreement that includes only the duties specified by the License Code. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

You are holding an open house on your listing. A buyer prospect who is not working with any other licensee comes through the open house. After some conversation with the buyer, the buyer states that they want to write an offer on the property. You go back to your office and write the offer for the buyer. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the seller? Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the seller? ALL specified in INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the buyer? Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate owe to the buyer? ALL specified in INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

Section (D) D. A firm that provides brokerage services to both parties in a transaction shall provide written notice to both parties that the broker is providing brokerage services to both parties to a transaction prior to the parties signing a contract to purchase, lease, option or exchange real estate. INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. INSTRUCTOR NOTES: NOTE: The answer to these questions is ALL duties are owed to both buyer and seller because of the in house transaction within the brokerage and by one sales associate. Section (B) printed below. In both of these scenarios, the assumption is that the work that the sales associate is doing is enough to be considered “providing brokerage services” to that party. The definition of “brokerage services” in would very likely be satisfied in both of these scenarios. Section (B): B. When working with both parties to a transaction, the duties and responsibilities remain in place for both parties. Section (B) B. A broker may provide brokerage services to one or both parties in a transaction. OREC Proposed Rules, Section 605: d) Providing services to more than one party to the transaction. When a firm provides brokerage services to more than one party to the transaction, the broker shall provide written notice to those parties that the broker is providing brokerage services to more than one party. When a firm provides brokerage services to both sides of the transaction, the firm shall ensure compliance with the duties and responsibilities in Title 59, O.S., Section along with all other requirements of the License Code and Rules. Materials Page 15 © Copyright, Oklahoma Real Estate Commission, 2013

The In-House Sale & “Designated” Brokerage
You are a sales associate and have listing on a residential property. You and your broker** have entered into a written Exclusive Right to Sell Listing Agreement that specifies that you, as the licensee working with the seller, are the sole and only licensee “designated” by the broker to work with the seller. Materials Page 16 © Copyright, Oklahoma Real Estate Commission, 2013

The agreement specifies that you and the broker are the only licensees in the firm that will provide brokerage services to the seller. The agreement also specifies that additional licensees may be named by the broker and agreed to by the seller. Materials Page 16 © Copyright, Oklahoma Real Estate Commission, 2013

Another sales associate in your firm (Licensee B) is working with a buyer. Licensee B and your broker have entered into a written Exclusive Buyer Broker Agreement that specifies that Licensee B, as the licensee working with the buyer, is the sole and only licensee “designated” by the broker to work with the buyer. Materials Page 16 © Copyright, Oklahoma Real Estate Commission, 2013

The agreement specifies that Licensee B and the broker are the only licensees in the firm that will provide brokerage services to the buyer. The agreement also specifies that additional licensees may be named by the broker and agreed to by the buyer. Licensee B writes an offer for the buyer on your listing and presents it to you. Materials Page 16 © Copyright, Oklahoma Real Estate Commission, 2013

Is this type of “designated” brokerage services agreement allowed under the License Code? Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Is this type of “designated” brokerage services agreement allowed under the License Code? Yes. A “designated” brokerage services agreement is not prohibited and thus allowed. INSTRUCTOR NOTES IN FULL: Yes. A “designated” brokerage services agreement is not prohibited and thus allowed. However, best practices would require that the agreement be specific about the role of the firm’s broker or branch office broker and it should be clear in the agreement that no other licensee is providing brokerage services to that party or considered to be working with that party, unless additional licensees are named. Best practices and good risk management practices would be for the broker to consider themselves as “working with both parties” under Section (B) and thus owing all duties in the License Code to both parties. In addition, a VERY important point is that in ANY in-house sale, the “firm” would be considered to be providing brokerage services to both parties and thus Section (D) requires a written notice to both parties that the broker is providing brokerage services to both parties. This written notice must be given PRIOR TO the parties signing a contract to purchase, lease, option or exchange. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Best practices: Agreement be specific about the role of the firm’s broker or branch office broker. Clear in the agreement that no other licensee is providing brokerage services to that party or considered to be working with that party, unless additional licensees are named. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Best practices: Best practices and good risk management practices would be for the broker to consider themselves as “working with both parties” under Section (B) and thus owing all duties in the License Code to both parties. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Best practices: VERY important: In ANY in-house sale, the “firm” would be considered to be providing brokerage services to both parties; Section (D) requires a written notice to both parties that the broker is providing brokerage services to both parties. Written notice must be given PRIOR TO the parties signing a contract to purchase, lease, option or exchange. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

What duties do you as a sales associate providing brokerage services only to the seller owe to the buyer? ALL specified in EXCEPT for (A)(3) and (A)(4) Duties owed only when providing brokerage services Inform about closing costs. Keep informed about the transaction. INSTRUCTOR NOTES: Section (A) 3. Inform in writing the party for whom the broker is providing brokerage services when an offer is made that the party will be expected to pay certain closing costs, brokerage service costs and approximate amount of the costs; Section (A) 4. Keep the party for whom the broker is providing brokerage services informed regarding the transaction; Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

If you receive confidential information directly from the buyer, do you owe the buyer a duty of confidentiality about that information? Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

If you receive confidential information directly from the buyer, do you owe the buyer a duty of confidentiality about that information? YES. Confidential information directly from the buyer, duty of confidentiality is owed to that party. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

If you happen to reveal the seller’s confidential information to the buyer’s licensee and the buyer’s licensee discloses the seller’s confidential information to the buyer, would you be in violation of the License Code? Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

YES. Duty of confidentiality extends only to information received from a party. Licensees in a “designated” brokerage relationship must keep the defined information confidential from BOTH licensees IN the company and outside of the company. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

What duties does the sales associate assisting the buyer owe to the seller? ALL specified in EXCEPT for (A)(3) and (A)(4) (not providing brokerage services to the seller, per the agreement). INSTRUCTOR NOTES: ALL specified in EXCEPT for (A)(3) and (A)(4) - cited below. Remind the students to remember questions 4 and 5 above - that the duty of confidentiality extends only to information received from a party. Licensees in a “designated” brokerage relationship must keep the defined information confidential from BOTH licensees IN the company and outside of the company. Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Could you have a written “designated” brokerage services agreement that provided only the broker and the licensee working with the client owed the duties and responsibilities in the License Code to that client? Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

NO. Section (A) states “A broker shall have the following duties and responsibilities to a party, which are mandatory and may not be abrogated or waived by a broker: … INSTRUCTOR NOTES: NO. Section (A) states “A broker shall have the following duties and responsibilities to a party, which are mandatory and may not be abrogated or waived by a broker: …” Under this part of the License Code (Section (1)), the term “broker” also includes “an associated broker associate, sales associate, or provisional sales associate authorized by a real estate broker to provide brokerage services.” This means that all provisions in the brokerage relationships section that use the term “broker” include all licensees with the firm. Of the duties specified by Section , only three can be specifically waived in writing. See page 13 of this Instructor Manual and below: 2. Receive all written offers and counteroffers. (NOTE: This duty can be specifically waived in writing by a party.) 3. Reduce offers or counteroffers to a written form upon request of any party to a transaction. (NOTE: This duty can be specifically waived in writing by a party.) 4. Present timely all written offers and counteroffers. (NOTE: This duty can be specifically waived in writing by a party.) Materials Page 17 © Copyright, Oklahoma Real Estate Commission, 2013

Property Management Materials Page 18

Key Issue: What is the relationship of a property manager to a tenant?
Property Management Key Issue: What is the relationship of a property manager to a tenant? Materials Page 18 © Copyright, Oklahoma Real Estate Commission, 2013

Property Management Is the property manager providing “brokerage services” to the tenant? Not usually under Rule 605: (b). Therefore, the duties owed to a party for whom the broker is providing brokerage services do not apply. Materials Page 18 © Copyright, Oklahoma Real Estate Commission, 2013

Property Management 858-353(A)(3)-(4)
3. Inform in writing the party for whom the broker is providing brokerage services when an offer is made that the party will be expected to pay certain costs, brokerage service costs and approximate amount of the costs. 4. Keep the party for whom the broker is providing brokerage services informed regarding the transaction. Materials Page 18 © Copyright, Oklahoma Real Estate Commission, 2013

Property Management OREC Proposed Rules 605:10-15-2(b):
(b) Brokerage service agreement defined. The term “brokerage service agreement” shall mean an oral or written agreement to provide brokerage services entered into by a real estate broker and a person who is a party to a real estate transaction and shall include, but not be limited to, listing agreements, buyer broker agreements and property management agreements. Materials Page 18 © Copyright, Oklahoma Real Estate Commission, 2013

Property Management OREC Proposed Rules 605:10-15-2(e):
(e) When a broker provides brokerage services to a landlord under a property management agreement, the services provided to the tenant by the broker shall not be construed as creating a broker relationship between the broker and the tenant unless otherwise agreed to in writing; however, the broker does owe to the tenant the duties of honesty and exercising reasonable skill and care. Materials Page 18 © Copyright, Oklahoma Real Estate Commission, 2013

Relationship Disclosure

Relationship Disclosure Tips
Before a party signs a contract: 1. You must describe and disclose the broker’s duties and responsibilities in the Code. 2. The descriptions/disclosures must be IN WRITING. 3. Includes ALL contracts to sell, purchase, lease, option, or exchange real estate. Materials Page 20 © Copyright, Oklahoma Real Estate Commission, 2013

Before a party signs a contract: 4. If providing brokerage services to BOTH parties, WRITTEN notice must be provided to both parties that the broker is providing brokerage services to both parties. 5. If the broker intends to provide fewer services than those required to complete a transaction, the broker must provide WRITTEN disclosure of what is not being provided. Materials Page 20 © Copyright, Oklahoma Real Estate Commission, 2013

In or attached to the contract: 1. You must CONFIRM the written disclosures given above. 2. Confirmation must be in a separate provision, incorporated in or attached to the contract. Materials Page 20 © Copyright, Oklahoma Real Estate Commission, 2013

In or attached to the contract: 3. Includes ALL contracts to sell, purchase, lease, option, or exchange real estate. 4. If the broker does not prepare the contract, compliance with the disclosure requirements shall be documented by the broker. Materials Page 20 © Copyright, Oklahoma Real Estate Commission, 2013

Written Agreements Materials Page 21

Written Agreements – When?
Section (A) (A) All brokerage agreements shall incorporate as material terms the duties and responsibilities set forth in Section of The Oklahoma Real Estate License Code. Materials Page 21 © Copyright, Oklahoma Real Estate Commission, 2013

Written Agreements – When?
OREC Proposed Rules 605: (b): (b) Brokerage service agreement defined. The term “brokerage service agreement” shall mean an oral or written agreement to provide brokerage services entered into by a real estate broker and a person who is a party to a real estate transaction and shall include, but not be limited to, listing agreements, buyer broker agreements and property management agreements. Materials Page 21 © Copyright, Oklahoma Real Estate Commission, 2013

What’s New and What’s Not - Handout
Summary and Closing What’s New and What’s Not - Handout INSTRUCTOR NOTES: NOTE: There is a handout for students as a “take away” summarizing what’s changed and what has not. Materials Page 21 © Copyright, Oklahoma Real Estate Commission, 2013

The New Normal in Oklahoma Brokerage Relationships

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The New Normal in Oklahoma Brokerage Relationships

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