Flat fee listings and limited agencies

Reprinted from the Ohio Division of Real Estate & Professional Licensing Newsletter - Winter 2004/2005

Many brokerages now offer flat fee listings or limited agency services. In our spring 2003 newsletter, the Division explained that, in limited agency relationship and flat fee listings, a licensee may limit their agency duties but not their fiduciary duties to clients. Examples of general fiduciary duties that cannot, under any circumstances, be "contracted away" are:

1. Keeping confidential all confidential information;

2. Accounting in a timely manner for all moneys and property received in which the client has or may have an interest;

3. Disclosing to the client any material facts of the transaction of which the licensee is aware or should be aware in the exercise of reasonable skill and care;

4. Complying with all requirements of license law;

5. Following any lawful instructions of the client;

6. Exercising reasonable skill and care in representing the client and carrying out the responsibilities of the agency relationship;

7. Performing the terms of any written agency agreement;

8. Performing all duties specified in license law in a manner that is loyal to the interest of the client;

9. Advising the client to obtain expert advice related to material matters when necessary or appropriate.

If a licensee represents the seller, examples of fiduciary duties that cannot be "contracted away" are:

1. Seeking a purchase offer at a price and with terms acceptable to the client;

2. Providing the seller with a copy of any agency disclosure form signed by the purchaser;

3. Presenting any purchase offer to the client in a timely manner.

Therefore, pursuant to the agency agreement, buyers? agents are to present offers directly to the seller if a purchase offer is provided to the seller's agent, the seller's agent must still present the offer to the seller in a timely manner. If the agent does not, he or she is breaching their fiduciary duty, a violation of license law.

If a licensee represents the buyer, examples of fiduciary duties that cannot be "contracted away" are:

1. Seeking a property at a price and with terms acceptable to the purchaser;

2. Presenting any offer to purchase or lease to a seller or the seller's agent.

As a buyer's agent presenting an offer directly to a seller participating in a limited agency, the buyer's agent must be careful not to "cross the sign" by providing services to the seller normally undertaken by a seller's agent. A buyer's agent may protect themselves by taking certain precautions. When presenting the offer to the seller, license law requires that the buyer's agent present the agency disclosure form indicating that he or she only represents the buyer in the transaction. The seller should understand that the buyer's agent is only acting on behalf of the buyer.

In addition, the Division encourages buyers' agents in this situation to present a letter explaining that it is inappropriate for him or her to discuss strategy or advise the seller in any way. Also, the letter should provide that if the seller needs such assistance in evaluating an offer, then the seller should contact their listing agent or personal legal counsel. An example of such a letter may be found on the Division's website at http://www.com.state.oh.us/real/realform.htm#re.

Fiduciary duties are in Ohio Revised Code Sections 4735.62, 4735.63, and 4763.65. The ODRE newsletter with the previous article, "Flat Fee Listings and Limited Agency Clarified" may be found at www.com.state.oh.us/real/newsletters.aspx in the Spring 2003 issue.