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Disclosure is a two way street...

Disclosure is a two way street...

New York State Real Property Law Article 12A Section 443 requires that brokers and salespersons give prospective prospects (e.g. buyers, sellers, landlords and/or tenants) upon first substantive contact a disclosure statement that describes the roles of brokers while working in their capacities as tenants' agents, landlords' agents sellers' agents, buyers' agents and dual agents. It's intended, among other things, to warn the public not to reveal to the opposing party's agent any information one prefers to keep confidential.

However, there are things that materially affect the transaction that must be disclosed. That's where life gets really tricky because in order for someone to be an agent they must be acting in a fiduciary capacity for someone else.

As an agent no one wants to get tangled up in the statutes of frauds because of an intentional misrepresentation by a client. What was true on Monday may not be true on Friday so as circumstances change agents need to be updated in a timely manner by their clients and customers. 

Why do you think we get cranky when people lie to us? That includes a lie by omission people... Why do you think we're always running about trying to verify everything we can find out? (Have you heard the one about the closing where the chick was really the girlfriend and not the wife?) Why do you think we comb the public records regarding a property you say you want to see, buy or rent?

We want to know as much as we can about a property so if owners are filing for bankruptcy, have liens, are in preforeclosure but are trying to hide serious financial facts from us because you/he/she/they would prefer to keep that bit of personal mess confidential you need to look at the bigger picture. If it can stop the real estate transaction from happening you need to be honest and disclose this to the firm you have hired to represent your interests. If time is of the essence then we all really need to know how much time we have to move or rent a property.

New York state law requires real estate licensees who are acting as agents of  tenants, landlords, buyers or sellers of property to advise the potential landlords, renters, buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates. Disclosure is all about helping people to make informed choices about the business relationships they enter with the real estate broker and sales associates responsible for working on the projects initiated by customers and clients. Not understanding the roles people play as part of a professional team may lead to misconceptions of what one is or is not entitled to. 

Most people don't even realize that they may actually receive more than one disclosure form because New York State law requires that each agent assisting in the transaction is to provide a disclosure form. "Assisting in the transaction" being a phrase you may want to remember...  Just because you signed an open house visit list and an agency disclosure form and asked a couple of questions about a house doesn't mean you entered into a representation contract. Listing Agents holding open houses are under contractual obligation to their sellers to show that home and answer questions regarding the property. They are there to put forward the best interests of the sellerTheir fiduciary responsibility is to the seller.

According to New York State Law "A seller's agent is an agent who is engaged by a seller to represent the seller's interests. The seller's agent does this by securing a buyer for the seller's home at a price and on terms acceptable to the seller. A seller's agent has, without limitation, the following fiduciary duties to the seller: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account. A seller's agent does not represent the interests of the buyer. The obligations of a seller's agent are also subject to any specific provisions set forth in an agreement between the agent and the seller. In dealings with the buyer, a seller's agent should (a) exercise reasonable skill and care in performance of the agent's duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law."

They are supposed to answer your questions honestly and deal with you in good faith. Don't assume they are representing you because they answer your questions... "A seller's agent does not represent the interests of the buyer," is a statement on the NYS Disclosure Form that buyers need to pay careful attention to.

IN NYS IF YOU WANT THE SAME REPRESENTATIVE YOU MUST GET YOUR DUAL AGENCY AGREEMENT IN WRITING.

According to New York State Law: "A real estate broker may represent both the buyer and the seller if both the buyer and seller give their informed consent in writing. In such a dual agency situation, the agent will not be able to provide the full range of fiduciary duties to the buyer and seller. The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent, and the buyer and seller. An agent acting as a dual agent must explain carefully to both the buyer and seller that the agent is acting for the other party as well. The agent should also explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are giving up their right to undivided loyalty. A buyer or seller should carefully consider the possible consequences of a dual agency relationship before agreeing to such representation."

Have I had a Buyer's Brokerage agreement and Listing Agent Agreement resulting in both of my clients sitting at the same kitchen table negotiating in good faith for a property? Yeah... so if you have an expectation to get paid both commission splits regarding the listing and seller sides of a transaction then you had better make sure your disclosures and contractual agreements are signed and that there is a proper paper trail for dual agency that includes a new disclosure form will both party signatures on it regarding the buyer and seller being aware of the dual agency in progress... A real estate broker may represent both the buyer and the seller if both the buyer and seller give their informed consent in writing so if this is what everyone wants then make sure it is done properly.

If the seller does not want their Listing Agent to represent the buyer the Listing Agent must make it perfectly clear to the buyer that at all times during negotiations, contact and conversations they represent the best interests of the seller while working on the transaction to go forward with the sale of the home. Some of you may even hate the fact that the buyer may turn up with an agent to negotiate the same sale on their behalf and submit their written binders. Under NYS law agents have a duty to cooperate and present all offers... so don't player hate if the seller wants to keep your loyalty and expertise all for themselves. In their mind they were shrewd enough to hire you and the fact that the buyer wants to hire you as well is a confirmation of their good business sense.

 

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Comment balloon 3 commentsC Tann-Starr • June 14 2011 06:14PM

Comments

Wordy,

A copy of the disclosure form would be helpful and a copy of the sales agreement where the brokers try to disclaim everything even more so.

I haven't seen eather from from NY.

Bill

Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) almost 7 years ago

Bill, I left the link on the previous Buyer's Brokerage post which started this conversation. People can always Google it. ;-)

Here is the disclosure form link for buyers and sellers: http://www.dos.state.ny.us/forms/licensing/1736-a.pdf  

Here is the disclosure form link for tenants and landlords: 

https://hedd.allaccessnyc.com/Documents/new_york_state_disclosure_form_for_landlord_and_tenant.2011.pdf

I will not link to representation contracts because they are MLS, Brokerage House and Law Firm specific. We use fill in the blank ones up here created by attorneys for the MLS/Brokerage members. The broker owner decides which to purchase and those are the ones we use. The Buyer Brokerage agreements I have in my file cabinet at home are from the Long Island Board of Realtors. :-)  

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 7 years ago

THis is really important stuff. I can't believe it hasn't been featured. You make a seriously crucial point (among others) : we do alot of work for people who could vanish into this air with no warning or explanation. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) almost 7 years ago

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