Since November 2000, the Oklahoma Broker Relationships Act has outlined the types of relationships that licensed brokers can have with the public as well as the duties of brokers and their licensees in the state of Oklahoma.
Thirteen years ago, Oklahoma moved from the rule of agency, which was common law determined by court case precedent, to statute law passed by the Legislature that determined how we represent clients. In the process, we eliminated dual agency. One agent had to step back from the transaction if both listing and selling agent were in the same office, or if you sold with both sides of the transaction.
The act served an important purpose, but as the industry has shifted and changed with the times, so must the rules governing that industry.
That’s why in May 2013, Oklahoma Gov. Mary Fallin signed House Bill 2524, legislation that reformed the Oklahoma Broker Relationships Act. The goal of these updates, which will take effect Nov. 1, is to ensure the guidelines are in compliance with current standards and practices in the real estate industry.
The changes to the act make for a better understanding that real estate professionals work for the transaction with honesty for all parties. It also makes providing information vital, so all parties can make the right decision.
As president of the Oklahoma Association of Realtors, the group that sponsored the initial act, these changes are a welcome update to our industry.
I began my career in real estate in 1989. At the time, all Realtors represented the seller, until a class action lawsuit in Minnesota. The lawsuit made it so that buyers could have equal representation. Disclosure issues began to surface that created problems, with no one being represented in some instances.
In order to ensure all parties are clear as to responsibilities in a transaction, the new act provides clarity. The previous version of the act caused Realtors to have to walk a tightrope with two types of representation. It also created the options of either total and singular representation, or no representation.
The new act focuses more on what the public understands about how real estate works. Both home buyers and sellers will be better served when they are ensured that any real estate practitioner is in compliance with ethics and the established legal guidelines.
Essentially, the new law starts at the root of a transaction and defines services that any participant needs and deserves regardless of whether a Realtor is working with one side or two. It then builds on top of that with a brokerage agreement as it relates to listing a home for sale, and specific requirements tailored to the needs of the client.
What doesn’t change from previous brokerage law is the requirement of confidentiality, and accountability for money and property related to the transaction.
Under the previous version of the act, real estate licensees provide services as single-party brokers or transaction brokers. These two roles caused confusion, which resulted in reforms to the act.
The new act outlines how real estate licensees perform transactions with one or multiple parties. The licensees are no longer referred to as a single-party broker or transaction broker. All licensees are brokers and share the same duties and responsibilities.
The amended act also defines a broker as a real estate broker, an associated broker associate, sales associate, or provisional sales associate authorized by a real estate broker to provide brokerage services. According to the act, the broker has the duties of treating all parties with honesty and exercise reasonable skill and care.
The new law may look like transactional brokerage, but there is a difference. The new law assigns the five primary duties that one or both agents have in working for the transaction:
1. Treat all parties with honesty and exercise reasonable skill and care;
2. Unless specifically waived in writing by a party to the transaction:
a) receive all written offers and counteroffers
b) reduce offers or counteroffers to a written form upon request of any party to a transaction, and
c) present timely all written offers and counteroffers;
3. Timely account for all money and property received by the broker;
4. Keep confidential information received from a party or prospective party confidential. The confidential information shall not be disclosed by a firm without the consent of the party disclosing the information unless consent to the disclosure is granted in writing by the party or prospective party disclosing the information, the disclosure is required by law, or the information is made public or becomes public as the result of actions from a source other than the firm.
5. Disclose information pertaining to the property as required by the Residential Property Condition Disclosure Act.
Those duties were not assigned in the previous law if someone worked as a transactional broker.
The law that goes into effect on Nov. 1 still allows local boards to create listing agreements that may differ board-to-board, but the purchase contract is statewide, as well as how we represent the transaction.
The Oklahoma Association of Realtors wants to make sure there is a clear understanding of the new act, which is why we will be providing classes sponsored by the state and local boards in conjunction with the real estate commissions. Licensees are also required to update education every three years. This will allow the public to have a direct and easier understanding of the act, build public confidence and eliminate the concern of Realtors shifting between the two types of representation.
Now Realtors will have the duty of following the new law even without a written agreement and that before any action is taken the disclosure of duties must be in writing in all cases, and some duties would have to be waived by the client in writing if not wanted. Brokerage relationships for listings will also be further defined, but duties of confidentiality are still maintained on both sides of the transaction unless waived in writing.
Updates to the act will go in effect Nov. 1. All Realtors who have listing or buyers agreements in place will have to change them to the new law when they expire after Nov. 1, or earlier if the seller’s disclosure of property condition reaches six months from signing.
The purchase or sale of a home is a major event in one’s life, and one that should not be taken lightly or without full regard for the laws in place. The additional clarification provided by the updated Oklahoma Broker Relationships Act will help ensure all parties are adequately represented and fully informed in the transaction.
Joe Pryor is a team leader at RedBud Realty, in Edmond, Okla., and the 2013 president of the Oklahoma Association of Realtors.