Provided by RAB Property Management
The Law of Real Estate Agency
This pamphlet describes
your legal rights in dealing with a real estate broker or salesperson.
Please read it carefully before signing any
documents.
The following is only a brief summary of the attached
law:
SECTION 1. Definitions. Defines the
specific terms used in the law.
SECTION 2. Relationships between Licensees and the
Public. States that a licensee who works with a buyer
or tenant represents that buyer or tenant -- unless the licensee is the
listing agent, a seller's subagent, a dual agent, the seller personally or the
parties agree otherwise. Also states that in a transaction involving two
different licensees affiliated with the same broker, the broker is a dual
agent and each licensee solely represents his or her client -- unless the
parties agree in writing that both licensees are dual agents.
SECTION 3. Duties of a Licensee
Generally. Prescribes the duties that are owed by all licensees,
regardless of who the licensee represents. Requires disclosure of the
licensee's agency relationship in a specific transaction.
SECTION 4. Duties of a Seller's Agent.
Prescribes the additional duties of a licensee representing the seller or
landlord only.
SECTION 5. Duties of a Buyer's Agent. Prescribes
the additional duties of a licensee representing the buyer or tenant
only.
SECTION 6. Duties of a Dual Agent.
Prescribes the additional duties of a licensee representing both parties in
the same transaction, and requires the written consent of both parties to the
licensee acting as a dual agent.
SECTION 7. Duration of Agency
Relationship. Describes when an agency relationship begins and
ends. Provides that the duties of accounting and confidentiality continue
after the termination of an agency relationship.
SECTION 8. Compensation. Allows brokers
to share compensation with cooperating brokers. States that payment of
compensation does not necessarily establish an agency relationship. Allows
brokers to receive compensation from more than one party in a transaction with
the parties' consent.
SECTION 9. Vicarious Liability.
Eliminates the common law liability of a party for the conduct of the party's
agent or subagent, unless the agent or subagent is insolvent. Also limits the
liability of a broker for the conduct of a subagent associated with a
different broker.
SECTION 10. Imputed Knowledge and
Notice. Eliminates the common law rule that notice to or
knowledge of an agent constitutes notice to or knowledge of the
principal.
SECTION 11. Interpretation. This law
replaces the fiduciary duties owed by an agent to a principal under the common
law, to the extent that it conflicts with the common law.
SECTION 1
Definitions.
Unless the context
clearly requires otherwise, the definitions in this section apply throughout
this chapter.
(1) "Agency relationship" means the
agency relationship created under this chapter or by written agreement between a
licensee and a buyer and/or seller relating to the performance of real estate
brokerage services by the licensee.
(2) "Agent" means a licensee who has
entered into an agency relationship with a buyer or seller.
(3) "Business opportunity" means and
includes a business, business opportunity, and goodwill of an existing business,
or any one or combination thereof.
(4) "Buyer" means an actual or
prospective purchaser in a real estate transaction, or an actual or prospective
tenant in a real estate rental or lease transaction, as applicable.
(5) "Buyer's agent" means a licensee
who has entered into an agency relationship with only the buyer in a real estate
transaction, and includes subagents engaged by a buyer's agent.
(6) "Confidential information" means
information from or concerning a principal of a licensee that:
(a) Was acquired by the licensee during
the course of an agency relationship with the principal;
(b) The principal reasonably expects to
be kept confidential;
(c) The principal has not disclosed or
authorized to be disclosed to third parties;
(d) Would, if disclosed, operate to the
detriment of the principal; and
(e) The principal personally would not
be obligated to disclose to the other party.
(7) "Dual agent" means a licensee who
has entered into an agency relationship with both the buyer and seller in the
same transaction.
(8) "Licensee" means a real estate
broker, associate real estate broker, or real estate salesperson, as those terms
are defined in chapter 18.85 RCW.
(9) "Material fact" means information
that substantially adversely affects the value of the property or a party's
ability to perform its obligations in a real estate transaction, or operates to
materially impair or defeat the purpose of the transaction. The fact or
suspicion that the property, or any neighboring property, is or was the site of
a murder, suicide or other death, rape or other sex crime, assault or other
violent crime, robbery or burglary, illegal drug activity, gang-related
activity, political or religious activity, or other act, occurrence, or use not
adversely affecting the physical condition of or title to the property is not a
material fact.
(10) "Principal" means a buyer or a
seller who has entered into an agency relationship with a licensee.
(11) "Real estate brokerage services"
means the rendering of services for which a real estate license is required
under chapter 18.85 RCW.
(12) "Real estate transaction" or
"transaction" means an actual or prospective transaction involving a purchase,
sale, option, or exchange of any interest in real property or a business
opportunity, or a lease or rental of real property. For purposes of this
chapter, a prospective transaction does not exist until a written offer has been
signed by at least one of the parties.
(13) "Seller" means an actual or
prospective seller in a real estate transaction, or an actual or prospective
landlord in a real estate rental or lease transaction, as applicable.
(14) "Seller's agent" means a licensee
who has entered into an agency relationship with only the seller in a real
estate transaction, and includes subagents engaged by a seller's agent.
(15) "Subagent" means a licensee who is
engaged to act on behalf of a principal by the principal's agent where the
principal has authorized the agent in writing to appoint subagents.
Relationships between Licensees and the
Public.
(1) A licensee who
performs real estate brokerage services for a buyer is a buyer's agent unless
the:
(a) Licensee has entered into a written
agency agreement with the seller, in which case the licensee is a seller's
agent;
(b) Licensee has entered into a
subagency agreement with the seller's agent, in which case the licensee is a
seller's agent;
(c) Licensee has entered into a written
agency agreement with both parties, in which case the licensee is a dual
agent;
(d) Licensee is the seller or one of
the sellers; or
(e) Parties agree otherwise in writing
after the licensee has complied with SECTION 3 (1)(f).
(2) In a transaction in which different
licensees affiliated with the same broker represent different parties, the
broker is a dual agent, and must obtain the written consent of both parties as
required under SECTION 6. In such a case, each licensee
shall solely represent the party with whom the licensee has an agency
relationship, unless all parties agree in writing that both licensees are dual
agents.
(3) A licensee may work with a party in
separate transactions pursuant to different relationships, including, but not
limited to, representing a party in one transaction and at the same time not
representing that party in a different transaction involving that party, if the
licensee complies with this chapter in establishing the relationships for each
transaction.
SECTION 3
Duties of a Licensee Generally.
(1) Regardless of whether
the licensee is an agent, a licensee owes to all parties to whom the licensee
renders real estate brokerage services the following duties, which may not be
waived:
(a) To exercise reasonable skill and
care;
(b) To deal honestly and in good
faith;
(c) To present all written offers,
written notices and other written communications to and from either party in a
timely manner, regardless of whether the property is subject to an existing
contract for sale or the buyer is already a party to an existing contract to
purchase;
(d) To disclose all existing material
facts known by the licensee and not apparent or readily ascertainable to a
party; provided that this subsection shall not be construed to imply any duty to
investigate matters that the licensee has not agreed to investigate;
(e) To account in a timely manner for
all money and property received from or on behalf of either party;
(f) To provide a pamphlet on the law of
real estate agency in the form prescribed in RCW 18.86.120 to all parties to whom the licensee
renders real estate brokerage services, before the party signs an agency
agreement with the licensee, signs an offer in a real estate transaction handled
by the licensee, consents to dual agency, or waives any rights, under SECTION 2
(1)(e), 4 (1)(e), 5 (1)(e), or 6 (2) (e) or (f), whichever occurs
earliest; and
(g) To disclose in writing to all
parties to whom the licensee renders real estate brokerage services, before the
party signs an offer in a real estate transaction handled by the licensee,
whether the licensee represents the buyer, the seller, both parties, or neither
party. The disclosure shall be set forth in a separate paragraph entitled
"Agency Disclosure" in the agreement between the buyer and seller or in a
separate writing entitled "Agency Disclosure."
(2) Unless otherwise agreed, a licensee
owes no duty to conduct an independent inspection of the property or to conduct
an independent investigation of either party's financial condition, and owes no
duty to independently verify the accuracy or completeness of any statement made
by either party or by any source reasonably believed by the licensee to be
reliable.
SECTION 4
Duties of a Seller's Agent.
(1) Unless additional
duties are agreed to in writing signed by a seller's agent, the duties of a
seller's agent are limited to those set forth in SECTION 3
and the following, which may not be waived except as expressly set forth in (e)
of this subsection:
(a) To be loyal to the seller by taking
no action that is adverse or detrimental to the seller's interest in a
transaction;
(b) To timely disclose to the seller
any conflicts of interest;
(c) To advise the seller to seek expert
advice on matters relating to the transaction that are beyond the agent's
expertise;
(d) Not to disclose any confidential
information from or about the seller, except under subpoena or court order, even
after termination of the agency relationship; and
(e) Unless otherwise agreed to in
writing after the seller's agent has complied with SECTION 3(1)(f), to make a good faith and continuous effort to find a buyer for
the property; except that a seller's agent is not obligated to seek additional
offers to purchase the property while the property is subject to an existing
contract for sale.
(2)(a) The showing of properties not
owned by the seller to prospective buyers or the listing of competing properties
for sale by a seller's agent does not in and of itself breach the duty of
loyalty to the seller or create a conflict of interest.
(b) The representation of more than one
seller by different licensees affiliated with the same broker in competing
transactions involving the same buyer does not in and of itself breach the duty
of loyalty to the sellers or create a conflict of interest.
SECTION 5
Duties of a Buyer's Agent.
(1) Unless additional
duties are agreed to in writing signed by a buyer's agent, the duties of a
buyer's agent are limited to those set forth in SECTION 3
and the following, which may not be waived except as expressly set forth in (e)
of this subsection:
(a) To be loyal to the buyer by taking
no action that is adverse or detrimental to the buyer's interest in a
transaction;
(b) To timely disclose to the buyer any
conflicts of interest;
(c) To advise the buyer to seek expert
advice on matters relating to the transaction that are beyond the agent's
expertise;
(d) Not to disclose any confidential
information from or about the buyer, except under subpoena or court order, even
after termination of the agency relationship; and
(e) Unless otherwise agreed to in
writing after the buyer's agent has complied with SECTION 3 (1)(f), to make a good faith and continuous effort to find a property for
the buyer; except that a buyer's agent is not obligated to: (i) Seek additional
properties to purchase while the buyer is a party to an existing contract to
purchase; or (ii) show properties as to which there is no written agreement to
pay compensation to the buyer's agent.
(2)(a) The showing of property in which
a buyer is interested to other prospective buyers by a buyer's agent does not in
and of itself breach the duty of loyalty to the buyer or create a conflict of
interest.
(b) The representation of more than one
buyer by different licensees affiliated with the same broker in competing
transactions involving the same property does not in and of itself breach the
duty of loyalty to the buyers or create a conflict of interest.
SECTION
6
Duties of a Dual Agent.
(1) Notwithstanding any
other provision of this chapter, a licensee may act as a dual agent only with
the written consent of both parties to the transaction after the dual agent has
complied with SECTION 3 (1)(f), which consent must include a
statement of the terms of compensation.
(2) Unless additional duties are agreed
to in writing signed by a dual agent, the duties of a dual agent are limited to
those set forth in SECTION 3 and the following, which
may not be waived except as expressly set forth in (e) and (f) of this
subsection:
(a) To take no action that is adverse
or detrimental to either party's interest in a transaction;
(b) To timely disclose to both parties
any conflicts of interest;
(c) To advise both parties to seek
expert advice on matters relating to the transaction that are beyond the dual
agent's expertise;
(d) Not to disclose any confidential
information from or about either party, except under subpoena or court order,
even after termination of the agency relationship;
(e) Unless otherwise agreed to in
writing after the dual agent has complied with SECTION 3 (1)(f), to make a good faith and continuous effort to find a buyer for
the property; except that a dual agent is not obligated to seek additional
offers to purchase the property while the property is subject to an existing
contract for sale; and
(f) Unless otherwise agreed to in
writing after the dual agent has complied with SECTION 3 (1)(f), to make a good faith and continuous effort to find a property for
the buyer; except that a dual agent is not obligated to: (i) Seek additional
properties to purchase while the buyer is a party to an existing contract to
purchase; or (ii) show properties as to which there is no written agreement to
pay compensation to the dual agent.
(3)(a) The showing of properties not
owned by the seller to prospective buyers or the listing of competing properties
for sale by a dual agent does not in and of itself constitute action that is
adverse or detrimental to the seller or create a conflict of interest.
(b) The representation of more than one
seller by different licensees affiliated with the same broker in competing
transactions involving the same buyer does not in and of itself constitute
action that is adverse or detrimental to the sellers or create a conflict of
interest.
(4)(a) The showing of property in which
a buyer is interested to other prospective buyers or the presentation of
additional offers to purchase property while the property is subject to a
transaction by a dual agent does not in and of itself constitute action that is
adverse or detrimental to the buyer or create a conflict of interest.
(b) The representation of more than one
buyer by different licensees affiliated with the same broker in competing
transactions involving the same property does not in and of itself constitute
action that is adverse or detrimental to the buyers or create a conflict of
interest.
SECTION 7
Duration of
agency relationship.
(1) The agency
relationships set forth in this chapter commence at the time that the licensee
undertakes to provide real estate brokerage services to a principal and continue
until the earliest of the following:
(a) Completion of performance by the
licensee;
(b) Expiration of the term agreed upon
by the parties;
(c) Termination of the relationship by
mutual agreement of the parties; or
(d) Termination of the relationship by
notice from either party to the other. However, such a termination does not
affect the contractual rights of either party.
(2) Except as otherwise agreed to in
writing, a licensee owes no further duty after termination of the agency
relationship, other than the duties of:
(a) Accounting for all moneys and
property received during the relationship; and
(b) Not disclosing confidential
information.