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Lou Tulga Transaction Brokerage in NM real estate

How Transaction Brokerage is the dominant brokerage relationship for New Mexico real estate brokers

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Lou Tulga Transaction Brokerage in NM real estate

  1. 1. Transaction Brokerage 4 Education CE Credit Hours Presented by Lou Tulga CCIM CRB www.loutulga.com 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 1
  2. 2. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 2 Ockham’s Razor “pluralitas non est ponenda sine necessitate” (“Don’t make matters more complicated than is necessary”)
  3. 3. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 3 Background of Brokerage Choice  Caveat emptor  Seller Agency  Notion of “Fairness to All Parties”  Emergence of Public Policy Requirements  Emergence of Consumer TORT Cases  Common Law of Agency Applied to Real Estate Practice at MLS Level  Emergence of Consumer AGENCY Cases
  4. 4. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 4 Key Questions  What Does Agency Look Like?  How Does Transaction Brokerage Look Different? (Review)  Why Would Anyone Demand Agency?  Why Would Anyone Refuse Agency?  Why Would a Client Accept Facilitation?  How Are Conflicts of Interest Handled?
  5. 5. …CAPACITY… Agency allows the granting of capacity to the agent to speak and act on behalf of the principal by “standing in the principal’s shoes” on matters within the agent’s Scope of Authority 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 5
  6. 6. States of “Choice”  In New Mexico the Parties make their own choices!  Transaction Brokerage  Dual Transaction Brokerage Facilitation  Exclusive Agency  Dual Agency Facilitation 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 6
  7. 7. Keep it Simple! Only 2 Roles and Only 2 Relationships 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 7 ROLE Exclusive Service Impartial Service RELATIONSHIP Transaction Broker Agent Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK
  8. 8. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 8 New Mexico Real Estate License Law 61-29-10.1  A. Agency solely by written express agency agreement—no type assumed, created orally or by implication  B. Brokerage may have written agreements without creating an agency relationship—and no agency duties will be imposed  C. Brokerage may provide real estate services without a written agreement—and no agency duties will be imposed
  9. 9. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 9 Service Standards: Broker Duties 1. Honesty & reasonable care 2. Performance of all written agreements 3. Providing understood assistance unless excluded by written service agreement with client/customer and disclosed in writing to any cooperating brokers 4. Acknowledgement of areas outside licensee’s expertise 5. Prompt accounting of monies or property 6. Timely provision of written copy of Broker Duties 7. Timely disclosure in writing of conflicts of interest of any kind 8. Timely disclosure of actually known adverse material facts about the property or transaction to clients and customers 9. Maintaining of confidential information from previous agency relationship 10.Unless authorized in writing maintaining of confidential information from one’s current client/customer except when disclosure is required by law (NMREC Part #19)
  10. 10. Facilitator Seller Buyer “In the Middle” 5/4/2015 10Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  11. 11. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 11 ROLE RELATIONSHIP TASK
  12. 12. Potential Office Conversation 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 12
  13. 13. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 13 “Once upon a Time-- there was No Serpent in Paradise”  Prior to the late 1980s--Brokers did not know agency as a legal term or its legal consequence –and when told were in surprised!  Brokers never heard of “OLDCAR” and Forms did not use the word “agency” until the early 1990s  Brokers happily and needed no E&O Insurance
  14. 14. The “Garden” was Beautiful  Caveat Emptor---if the buyer does not ask there is no duty to tell—just don’t lie!  Notion of “Fairness to ALL Parties”  The term, “Agent” was for used but was not defined  The ONLY disclosure requirement was for a broker to let the other party know that the broker was “buying or selling for the broker’s own account”—5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 14
  15. 15. An Issue that Never Goes Away 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 15
  16. 16. NAR 2011 Legal Scan 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 16
  17. 17. Keep it Simple! Only 2 Roles and Only 2 Relationships 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 17 ROLE Exclusive Service Impartial Service RELATIONSHIP Transaction Broker Agent Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK
  18. 18. States of “No Choice”  Licensee is an “Agent” and Buyer or Seller is an “Agency Principal” whether they want it or not!  HUD Repo Listing Broker Contracts—even in those states are “non-agency”---so those states simply look the other way but do not offer brokerage relationship choice 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 18
  19. 19. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 19 New Mexico Real Estate License Law 61-29-10.1  A. Agency solely by written express agency agreement—no type assumed, created orally or by implication  B. Brokerage may have written agreements without creating an agency relationship—and no agency duties will be imposed  C. Brokerage may provide real estate services without a written agreement—and no agency duties will be imposed
  20. 20. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 20 Service Standards: Broker Duties 1. Honesty & reasonable care 2. Performance of all written agreements 3. Providing understood assistance unless excluded by written service agreement with client/customer and disclosed in writing to any cooperating brokers 4. Acknowledgement of areas outside licensee’s expertise 5. Prompt accounting of monies or property 6. Timely provision of written copy of Broker Duties 7. Timely disclosure in writing of conflicts of interest of any kind 8. Timely disclosure of actually known adverse material facts about the property or transaction to clients and customers 9. Maintaining of confidential information from previous agency relationship 10.Unless authorized in writing maintaining of confidential information from one’s current client/customer except when disclosure is required by law (NMREC Part #19)
  21. 21. Potential Office Conversation 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 21
  22. 22. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 22 “Once upon a Time-- there was No Serpent in Paradise”  Prior to the late 1980s--Brokers did not know agency as a legal term or its legal consequence –and when told were in surprised!  Brokers never heard of “OLDCAR” and Forms did not use the word “agency” until the early 1990s  Brokers happily and needed no E&O Insurance
  23. 23. The “Garden” was Beautiful  Caveat Emptor---if the buyer does not ask there is no duty to tell—just don’t lie!  Notion of “Fairness to ALL Parties”  The term, “Agent” was for used but was not defined  The ONLY disclosure requirement was for a broker to let the other party know that the broker was “buying or selling for the broker’s own account”—5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 23
  24. 24. An Issue that Never Goes Away 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 24
  25. 25. NAR 2011 Legal Scan 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 25
  26. 26. Keep it Simple! Only 2 Roles and Only 2 Relationships 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 26 ROLE Exclusive Service Impartial Service RELATIONSHIP Transaction Broker Agent Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK
  27. 27. States of “No Choice”  Licensee is an “Agent” and Buyer or Seller is an “Agency Principal” whether they want it or not!  HUD Repo Listing Broker Contracts—even in those states are “non-agency”---so those states simply look the other way but do not offer brokerage relationship choice 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 27
  28. 28. States: Where Agency is the Automatic Relationship  Just by being licensed the licensee is in an agency relationship with those who receive the licensee’s services  This means anyone who “double-ends” a transaction is some form of “dual agent”  This means there is special liability for both the agent and the agency principal  Special remedies for “breach of fiduciary duties”5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 28
  29. 29. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 29 Common Misconceptions  That Transaction Broker is really “Transactional Broker”  Transaction Brokers are really ONLY  Intermediaries  Finders  Facilitators
  30. 30. States Where Agency is Created ONLY by Choice  Agency not created by common law “implications, appearances, accident, etc.”  Agency only by an express written agency agreement  Those special liabilities and remedies for both the licensee and client do not exist 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 30
  31. 31. Another---Cartoon! 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 31
  32. 32. Exclusive Exclusive Transaction Broker: “In Your Corner” Out of House Sale 5/4/2015 32Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  33. 33. Exclusive Exclusive Transaction Broker: “In Your Corner” –and has Buyer as Well Your Buyer Custome r 5/4/2015 33Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  34. 34. Exclusive Exclusive Agency: In Your Corner and In Your Shoes Out of House Sale 5/4/2015 34Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  35. 35. Seller’s Agent obtains Seller’s written permission for Dual Agency prior to an offer being presented and makes it clear that Agent will represent both parties as impartial facilitator Buyer’s Agent obtains Buyer’s written permission for Dual Agency prior to an offer being written and makes it clear that Agent will represent both parties as impartial facilitator What Can Two Clients Expect with One Agent in Dual Agency? 5/4/2015 35Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  36. 36. Transaction Broker Facilitation  This Broker is not in any Corner and not in any party’s shoes—but rather stands in the middle as an impartial facilitator 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 36
  37. 37. The Essence of Agency is Capacity  Authorization to speak or act on behalf of the agency principal for the agency principal’s benefit  Thi 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 37
  38. 38. Take a Good Look! 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 38
  39. 39. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 39 Transaction Broker Listing Agreement
  40. 40. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 40 Listing Agreement: Agency Addendum
  41. 41. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 41 Dual Agency Facilitation Role
  42. 42. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 42 Transaction Broker Facilitation Role*
  43. 43. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 43 Purchase Agreement Cover Page II Disclosures: #1
  44. 44. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 44 Purchase Agreement Cover Page II Disclosures: #2
  45. 45. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 45 Purchase Agreement Cover Page II Disclosures: #3
  46. 46. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 46 Purchase Agreement Cover Page II Disclosures: #4
  47. 47. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 47 Purchase Agreement Cover Page II Disclosures: #5
  48. 48. II. Sources  2011 NAR Legal Scan: Trend Discussion  NM Real Estate License Law  NM Real Estate Commission RULES Definitions Part 19 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 48
  49. 49. III. Standards of Conduct  Agency: OLDCAR  Parahoo v. Mancini: “You be the Judge”  Lombardo v. Albu: “You be the Judge” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 49
  50. 50. Meaning of Professionalism  __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ __________________________________ 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 50
  51. 51. Say What You Mean--- But Don’t Over-Promise  Represent  Protect  Agent  Loyalty  Advocate  Advise/Advice  Services  Assist 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 51
  52. 52. III. Transaction Brokerage  Not Agency  Can Be by Written Contract  Can Be Exclusive-- but to Only One Party at a Time  Can Be Impartial to both Parties Simultaneously 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 52
  53. 53. Listing Agreement Item 20: Example  “In the event that listing broker directly obtains a buyer for this property—seller and brokerage agree to modify this exclusive listing contract to provide for assistance for both seller and buyer by impartial facilitation” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 53
  54. 54. IV. Uncertainty of Agency Courts  Fiduciary Duty and Federal Law  Breach of Fiduciary Duty—Sources  Breach of Fiduciary Duty—Another Listing  Breach of Fiduciary Duty—Leasing  Breach of Fiduciary Duty—Listing Broker  Transaction Broker---Agency Remedies 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 54
  55. 55. V. Agency: Useful and Serious  Agency Can Be an Essential Relationship  Scope of Authority: Taking it Seriously  Importance of OLDCAR  Significance of “Respondeat Superior” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 55
  56. 56. Your Agency Perceptions 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 56 Agency EQUALS Superior Service Compared to Other Relationships Agency EQUALS Protection of Client’s Interests as Foremost Concern Agency EQUALS Authorization from Client to Make Promises to Others Agency EQUALS Protection of Client’s Interests as Primary Concern Agency EQUALS Professionalism of the Highest Order Agency EQUALS Client’s Potential Liability for Agent’s Words/Deeds Agency EQUALS Exceptional Remedies to Client for Agent’s Breach Agency EQUALS… __________________________________________
  57. 57. Transaction Broker—Services and Assistance without Authorization to Speak and Commit 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 57  “Not in Customer/Client’s Shoes” because they are in their Own Shoes”
  58. 58. Finis 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 58
  59. 59. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 59
  60. 60. Facilitator Seller Buyer “In the Middle” 5/4/2015 60Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  61. 61. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 61 Don’t Be Careless—with “Agent”  National Association of Realtors® is to blame— they tend to think everyone is an agent  Slogan: “Not all Agents are Realtors®”  NMREC Website: “Our function is to license real estate sales agents and brokers, and enforce the New Mexico Real Estate License Law and Commission Rules and Regulations. ”
  62. 62. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 62 Real Estate Commission Agency Disclosures Required  First NMREC Disclosure Requirements—1992  Subagency  Single Agency  Changes of Requirements over Time “First Substantive Contact” “Licensee Duties” “Agency solely by Written Agency Agreement “Broker Duties” “Transaction Broker Terminology
  63. 63. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 63 Real Estate Commission Agency Terminology/Requirements  First NMREC Disclosure Requirements—1992  Subagency, Buyer’s Agency, Dual Agency, Licensee  Licensee Duties  First Substantive Contact  Changes of Requirements over Time “Licensee Duties”—”Broker Duties” “Common Law of Agency Abrogated” “Transaction Broker Terminology”
  64. 64. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 64 A Billion Dollar Question  1,000,000 Real Estate Licensees X  $100.OO per year Spent in “Agency Education”= 1 Hundred Million X  20 Years = 20 Hundred Million Dollars Seeking to Understand all of This Equals = $2,000,000,000 Spent on the “Fix”
  65. 65. I. Introduction 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 65
  66. 66. NMREC Rules Definitions  A. Agency: the fiduciary relationship created solely by the express written agency agreement between a person and a brokerage, authorizing the brokerage to act as agent for the person according to the scope of authority granted in that express written agreement for real estate services subject to the jurisdiction of the commission.  5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 66
  67. 67. NMREC Rules Definitions  B. Agent: the brokerage authorized to act as a fiduciary for a person and to provide real estate services solely by means of an express written agreement. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 67
  68. 68. NMREC Rules Definition  TT. Transaction Broker: the non-fiduciary relationship created by 61-29-2 A 14 NMSA 1978, wherein a broker or brokerage provides real estate services without entering into an agency relationship. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 68
  69. 69. Transaction Brokerage Obligations  NMREC Broker Duties  Contract Performance  Subject to Breach of Contract  Subject to TORT Violations  Subject to Requirements of “Professional Duty” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 69
  70. 70. Agency Relationship Obligations  NMREC Broker Duties  Contract Performance  Subject to Breach of Contract  Subject to TORT Violations  Subject to Requirements of “Professional Duty”  Subject to Breach of “Fiduciary Duty” within Scope of Authority—subject to interpretation! 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 70
  71. 71. Agency and the National Association of Realtors® Code of Ethics  Article 1: “…When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary…” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 71
  72. 72. How Can this Be Interpreted when a Client is Unhappy?  1.  2.  3.  4.  5.  6.  7. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 72
  73. 73. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 73 Summary  By statute, all exclusive contracts for real estate services must be in writing and say so  By statute, all agency relationships for real estate services must be in writing and say so  By statute, real estate services may be provided by a transaction broker either with or without a written contract  By statute, all clients and customers are entitled to Broker Duties when receiving real estate services
  74. 74. II. RANM Forms Language 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 74
  75. 75. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 75 Listing Agreement: Agency Addendum
  76. 76. III. Contract Obligations 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 76
  77. 77. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 77 Listing Agreement Contract Duties  2. Duties of Broker. Broker will use diligence in effecting the sale of the Property, and will provide the following services: (a) assisting Seller to locate qualified buyers; (b) if requested, assisting potential buyers to locate financing and prepare offers; (c) assisting Seller in negotiating the terms of a sale; (d) assisting Seller in monitoring pre-closing and closing procedures.
  78. 78. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 78 Buyer Agreement Contract Duties  2. Duties of Broker. During the term of this Agreement Broker will: (a) Become familiar with Buyer's property requirements; (b) assist Buyer to locate suitable properties; (c) assist Buyer to locate financing; (d) assist Buyer to prepare offers (including providing information concerning comparable properties) (e) assist Buyer in negotiating acquisition terms; (f) assist Buyer in monitoring pre-closing and closing procedures; (g) act solely for Buyer in any transaction;
  79. 79. Listing Agreement Potential Item #20 “Other” 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 79 Brokerage appoints listing broker as Designated Broker to provide Seller exclusive services. Brokerage reserves the right to appoint additional Designated Brokers when Brokerage deems it necessary and Seller will be informed. In an “in-house” transaction Brokerage will appoint a Designated Broker to work exclusively with Buyer
  80. 80. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 80 Listing Agreement Item #20 “Other”  “In the event that listing broker obtains a buyer for this property-- seller and brokerage agree to modify this exclusive agreement to provide for impartial facilitation between seller and buyer”
  81. 81. IV. Task-Role-Relationship 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 81
  82. 82. Lou’s Relationship “Wheel” 5/4/2015 82Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  83. 83. Task Varieties  1.  2.  3.  4.  5.  6.  7.  8. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 83
  84. 84. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 84 Role Choices  Exclusive Services  Facilitation
  85. 85. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 85 Relationship Selection  Transaction Brokerage  Agency
  86. 86. V. A Second Look 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 86
  87. 87.  Transaction Broker  Provides assistance and services to client or customer  Does NOT have right to make decisions that bind client or customer  Does NOT have scope of authority to commit without written ratification of client or Discussion 5/4/2015 87Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  88. 88.  Transaction Broker should not make decision- recommendations to clients or customers – except to obtain more information prior to client or customer making their own decision  “I provide—you decided”—Realtor® Mantra Discussion 5/4/2015 88Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  89. 89.  Exclusive Agent—acts as a fiduciary precisely because agency carries with it the essential understanding of potential capacity to make decisions and bind a client—in keeping with implied or express scope of authority  Therefore, as a fiduciary who acts, an agent is held to a higher standard and may be accountable for damages, rescission, and loss of compensation Discussion 5/4/2015 89Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  90. 90. Facilitation is:  Impartial toward both parties  Both parties receive Basic Duties  Both parties receive pre-set limited recommendations for further information  Both parties understand that neither will receive decision-making recommendations  Both parties understand that confidentiality is preserved for both parties Discussion 5/4/2015 90Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  91. 91.  Exclusive Services of any kind means that the exclusive broker is promoting the interests of the client  Exclusive Agency means that the Exclusive Agent is not only promoting but also protecting the client’s interest in a fiduciary capacity with special penalties for “breach” of that duty Corner and Shoes 5/4/2015 91Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  92. 92.  Seller Client assisted by Exclusive Listing Broker Buyer Customer assisted by Exclusive Listing Broker What Can Client and Customer Expect? 5/4/2015 92Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  93. 93.  Seller Client assisted by Exclusive Listing Broker Buyer Client assisted by Exclusive Buyer Broker who is ALSO the Exclusive Listing Broker What Can the Two Clients Expect? 5/4/2015 93Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  94. 94. Qualifying Broker appoints Listing Broker as Designated Broker and Seller Client continues to receive Exclusive Services Qualifying Broker appoints Buyer Broker as Designated Broker and Buyer Client Continues to receive Exclusive Services What Can Two Clients Expect with Designated Broker Dual Representation? 5/4/2015 94Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  95. 95. Qualifying Broker appoints Listing Broker as Designated Agent and Seller Client continues to receive Exclusive Services Qualifying Broker appoints Buyer Broker as Designated Agent and Buyer Client Continues to receive Exclusive Services What Can Two Clients Expect Two Agents with Dual Agency? 5/4/2015 95Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  96. 96.  Impartial toward both parties  Both parties receive Basic Duties  Both parties receive pre-set limited recommendations for further information  Both parties understand that neither will receive decision-making recommendations  Both parties understand that confidentiality is preserved for both parties What Is Facilitation? 5/4/2015 96Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  97. 97. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 97 Benefits  Some Benefits  Minimizing Complexity  Minimizing Uncertainty  Avoiding Appearance of Authority to Commit Client  Say “Goodbye” to Dual Agency  Responsible for “Recognized/Measurable” Standards  Providing an Agency Alternative to Client’s Benefit  Fits the other than “Substantial Services” Agreements  A Better Fit for the world of “CBA’s,” and “AfBA’s,”
  98. 98. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 98 Why All This Matters  Expanding Expectations of Service  Increased Awareness of Legal Implications  Knowledge of Points of Vulnerability  Need to for Licensees to Self-Monitor
  99. 99. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 99 Potential Downsides Transaction Broker Is Acting like an “Agent”  Forgetting that “agency is capacity”  Taking on “agency specific tasks”  Misleading others to believe transaction broker is in fact acting as “agent” of client
  100. 100. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 100 The “Duck-Theory” and Task-Specific Agency  Duck Theory…”You are not an agent UNLESS you act like an agent…”  Task-Specific Agency Services  Trustee  “Acting as Though”  Accepting Delivery and Notice  Making Objections, etc. on Behalf of Client  Accepting Power of Attorney
  101. 101. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 101 Summary  The “Wheel”  TASK and ROLE suggest RELATIONSHIP  Agency  Transaction Broker Determine which is best to perform obligations of seller or buyer agreements
  102. 102. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 102 ROLE Exclusive Representative Facilitator RELATIONSHIP Transaction Brokerage Agency Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK Making Rational Choices
  103. 103. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 103
  104. 104. finis 5/4/2015 104Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  105. 105.  Brokerage appoints listing broker as Designated Broker to provide Seller exclusive services. Brokerage reserves the right to appoint additional Designated Brokers when Brokerage deems it necessary and Seller will be informed. In an “in-house” transaction Brokerage will appoint a Designated Broker to work exclusively with Buyer Listing Agreement Item #20 Possibilities 5/4/2015 105Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  106. 106.  Brokerage appoints listing broker as Designated Broker to provide Seller exclusive services. Brokerage reserves the right to appoint additional Designated Brokers when Brokerage deems it necessary and Seller will be informed. In an “in-house” transaction Brokerage will appoint a Designated Broker to work exclusively with Buyer 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 106
  107. 107. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 107
  108. 108.  Awareness and Involvement  “Known and Unknown”  Potential Litigation Sources  Valid and Exclusive Agreements 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 108
  109. 109.  In the event listing broker obtains a buyer for this listed property Seller and Brokerage agree to modify this exclusive agreement to provide for impartial facilitation between Seller and Buyer Listing Agreement Item #20 Possibilities 5/4/2015 109Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  110. 110.  Under the common law of agency “breach of fiduciary duty” carries special “accountability”  Not only “damages” as compensation to the agency client, but also  Potential for “rescission” of any already closed transaction  Potential that the agent has forfeited claim to the commission Corner and Shoes 5/4/2015 110Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  111. 111.  The real consequence of a broker being found to be an “agent” under the common law is exposure to remedies—a transaction broker is responsible under the common law of Tort for damages due to misrepresentation (intentional or otherwise) and negligence—but not loss of compensation or rescission of the transaction Corner and Shoes 5/4/2015 111Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  112. 112.  Both Seller and Buyer Clients can expect full disclosure and modification of contract for exclusive services to either:  Maintain Exclusive Services to Seller and NOT to Buyer  Maintain Exclusive Services to Buyer and NOT to Seller  Modify BOTH Exclusive Service Agreements to provide, in writing, for Impartial Facilitation What Can the Two Clients Expect? 5/4/2015 112Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved
  113. 113. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 113 Transaction Broker Rationale (1)  It is the parties' intention to minimize the likelihood that Seller will be held liable for the acts and omissions of the Broker and to eliminate the possibility that Broker is held liable to Seller under agency law.
  114. 114. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 114 Transaction Broker Rationale (2)  LIABILITY. Seller acknowledges that as a result of the agency relationship Seller can be held liable for acts or omissions of Broker that are within the scope of the Broker's authority
  115. 115. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 115 A House of Cards Built on Complex Disclosures
  116. 116. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 116 ROLE Exclusive Service Impartial Service RELATIONSHIP Transaction Broker Agent Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK
  117. 117. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 117 Classroom Input  Listing broker advertises a property as "being near public transportation" and as a result of the advertisement finds a buyer prospect who states up front that she must live close to public transportation because does not drive or own a vehicle. The listing broker writes the offer with the perception that the property is close to public transportation, but without making the close-by- availability –of- public- transportation a contingency in the offer to purchase. The offer is accepted along with $5,000 as earnest money. Two days after the date of acceptance, the listing broker sees a notice in the local newspaper of record that the only bus line serving that neighborhood would be permanently discontinued in one month.
  118. 118. Finis 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 118
  119. 119. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 119 NAR Code of Ethics—Written Service Agreements  “For the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions, including, but not limited to, listing and representation agreements…”
  120. 120. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 120 Agency Authorization  “For all regulated real estate transactions first executed on or after January 1, 2000, no agency relationship between a buyer, seller, landlord or tenant and a brokerage shall exist unless the buyer, seller, landlord or tenant and the brokerage agree, in writing, to the agency relationship. No type of agency relationship may be assumed by a buyer, seller, landlord, tenant or licensee, or created orally or by implication.” (NMSA 1978)
  121. 121. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 121
  122. 122. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 122 Prologue: The “Iron Age” of Agency Reality  Disclaimers  Disclosures  Choosing Sides—taking “agency” seriously  Complexities
  123. 123. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 123 I. INTRODUCTION  Background of Non-Agency in Real Estate Undefined and Unregulated and not Role Specific  Background of Agency in Real Estate Defined by Common Law and One-Sided  Agency Embraced by NAR Listings and All MLS Cooperation Based on Agency Only
  124. 124. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 124 Written Service Agreements without Agency “A brokerage may provide real estate services to a client pursuant to an express written agreement that does not create an agency relationship and no agency duties will be imposed on the brokerage” (NMSA 1978)
  125. 125. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 125 The “Wheel” •TASK •ROLE •RELATIONSHIP
  126. 126. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 126 II. Brokerage Relationships in New Mexico  Transaction Broker  Client—Services Differential?  Customer—Services Differential?  Exclusive Agency  Client Only and Only with Express Agency  Agency--Designated Agency--Subagency  Facilitation  Dual Transaction Broker or Dual Agent
  127. 127. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 127 Broker Assignment Agent  Scope of Authority: The client’s authorization-- within the scope of authority-- for agent to speak and/or act on client’s behalf and to commit client without client’s further approval
  128. 128. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 128 Broker Assignment Transaction Broker  Scope of Engagement: those tasks brokerage has accepted to do on behalf of the client or customer
  129. 129. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 129 Value of Written Service Agreements  Required to establish a contract for real estate services  Written instructions and acceptance  Makes brokerage relationships clear  Written permission of your principal is necessary to get paid by the other party to the transaction  Necessary for standing under Article 16 protection  Necessary for contract protection under common law  Creates a “commitment” in writing from client
  130. 130. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 130 Written Listing Agreement Benefits  1. _______________________________  2. _______________________________  3. _______________________________  4. _______________________________
  131. 131. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 131 Written Buyer Agreement Benefits 1. ______________________________ 2. ______________________________ 3. _______________________________ 4. _______________________________
  132. 132. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 132 Transaction Broker Listing Agreement  EXCLUSIVE SERVICES. The undersigned ("Seller") grants to the undersigned Broker firm the exclusive right to sell the real property described in Paragraph 3. Broker will act as Seller's Transaction Broker in this transaction without creating an agency relationship. Broker and Seller will owe each other loyalty.
  133. 133. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 133 Listing Broker Service Agreement Broker will use diligence in effecting the sale of the Property, and will provide the following services: (a) assisting Seller to locate qualified buyers; (b) if requested, assisting potential buyers to locate financing and prepare offers; (c) assisting Seller in negotiating the terms of a sale; (d) assisting Seller in monitoring preclosing and closing procedures--RANM
  134. 134. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 134 NAR CODE OF ETHICS— Clients and Customers  A Distinction in Terms Client—Written Agreement for Service Relationship Protected by Article 16 Customer—Without a written agreement with relationship NOT protected under Article 16
  135. 135. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 135 NAR Code of Ethics--Brokerage Relationships  Agency Treat client’s interests as primary and all parties with honesty  Nonagency Treat all parties with honesty
  136. 136. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 136 Agency Scope of Authority “The authority to act on behalf of or in place of a principal with specific parameters governing the brokerage’s authority to act” (NMREC Part #1)
  137. 137. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 137 Agency Fiduciary Duties  Obedience  Loyalty  Disclosure  Confidentiality  Accounting  Reasonable Care and Diligence
  138. 138. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 138 Listing Broker Agency Agreement  Broker will serve as Seller's agent in this transaction. In addition to the basic licensee duties, Broker will owe to Seller fiduciary duties.  Seller acknowledges that as a result of the agency relationship Seller can be held liable for acts or omissions of Broker that are within the scope of the Broker's authority.
  139. 139. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 139 Loyalty by Written Service Agreement Pledge of “Loyalty”  Agency Contract  Transaction Broker Contract Meaning of “Loyalty”  Agency Relationship?  Transaction Broker—Client and Customer?
  140. 140. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 140 Buyer Broker Service Agreement Broker will: (a) Become familiar with Buyer's property requirements; (b) assist Buyer to locate suitable properties; (c) assist Buyer to locate financing; (d) assist Buyer to prepare offers (including providing information concerning comparable properties); (e) assist Buyer in negotiating acquisition terms; (f) assist Buyer in monitoring pre-closing and closing procedures; (g) act solely for Buyer in any transaction … unless otherwise specifically and expressly agreed to by Buyer in writing;--RANM
  141. 141. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 141 Buyer Agreement Psychology RANM Compensation Provisions  Buyer “guarantees” broker’s compensation  Buyer gives broker permission to get compensation from “other side”  Buyer will pay the difference after consulting  Broker does not have to find or show when compensation is not enough  Buyer will pay broker if buyer causes default or if buyer cuts broker out after term is expired
  142. 142. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 142 Buyer Agreement Psychology Lou’s Provisions  Buyer owes loyalty to broker  Buyer owes no compensation to broker  Broker is given permission to get paid by “other side”  Broker owes broad range of professional duty  Agreement can be cancelled by either side with simple written notice
  143. 143. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 143 Dual Agency Agreement  BROKER'S DUAL AGENCY ROLE: Brokerage is representing both Buyer and Seller as clients by means of a written agency agreement with each of them. Buyer and Seller consent to Brokerage acting as a Dual Agent.  Buyer and Seller agree to modify the fiduciary duties of the brokerage. As a Dual Agent, Brokerage shall act as a facilitator between Buyer and Seller,
  144. 144. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 144 Dual Transaction Broker Agreement  Dual Transaction Facilitation: The parties agree that this Agreement supersedes and modifies the separate Exclusive Buyer and Listing Agreements between Broker and Buyer and Seller.  Broker’s Transaction Facilitation Role: Buyer and Seller consent to Broker not acting as exclusive representative for either party in order to facilitate this transaction
  145. 145. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 145 A SAMPLE Transaction Facilitation Statement. Broker will assist in the evaluation process and continue to offer such services as specified in any previously entered into written agreement with the Seller or Buyer— EXCEPT  Broker but will not takes sides or represent either party.  Broker will NOT disclose any pertinent information obtained during the term of an Exclusive Agreement unless by permission or required by law  Broker, will offer information and services to Seller and Buyer but will not takes sides or represent either party.
  146. 146. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 146 Buyer Broker Agency Agreement  Broker will serve as Buyer's agent. In addition to the basic licensee duties, Broker will owe to Buyer fiduciary duties.  Buyer acknowledges that as a result of the agency relationship Buyer can be held liable for acts or omissions of Broker that are within the scope of the Broker's authority
  147. 147. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 147 Dual Agency Duties--RANM  Buyer and Seller agree to modify the fiduciary duties of the brokerage. As a Dual Agent, Brokerage shall act as a facilitator between Buyer and Seller, shall not disclose confidential information of one party to the other without the affected party's consent, will provide information on an equal basis to assist Buyer and Seller to negotiate on their own behalf, but will not advocate for either Buyer or Seller.
  148. 148. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 148 NAR CODE OF ETHICS-- Confidentiality  Confidentiality  Preserved except by permission, disclosure is required by law, or for Realtor® to be able to defend himself when accused  Identical provisions for Realtors® as agents and nonagents
  149. 149. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 149 NAR Code of Ethics— Disclosure Issues Same duties for all Realtors® regardless of brokerage relationship  Discovery  Concealment  Misrepresentation
  150. 150. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 150 NAR Code of Ethics--Competence “The services which Realtors® provide to their clients and customer shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage” (Article 11)
  151. 151. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 151 NAR Code of Ethics— Conflict of Interest “Realtors® shall not undertake to provide professional services concerning property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all parties” (Article 5)
  152. 152. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 152 NAR Code of Ethics— Respect for Exclusive Agreements of Others  “…Realtors® shall not knowingly provide substantive services…to prospects who are parties to exclusive representation agreements, except with the consent of the prospects exclusive representative or at the direction of prospects” (SOP 16-13)
  153. 153. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 153 Consumer Protection and the Common Law of Tort  Fraud  Active  Passive  Negligent Misrepresentation  Negligence
  154. 154. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 154 Key New Mexico Tort Cases  Neff v Bud Lewis (1976)  Amato v Rathbun (1982)  Gouveia v Citicorp (1984)
  155. 155. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 155 Common Law Uncertainties  Case Specific  Case Law Precedence  Risk Management Responses
  156. 156. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 156 Some “Reality Checks”  Broker Service Check List  Comparisons  Duty Intensifiers  Service Expanders  Greater Obedience
  157. 157. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 157 Selected Law Cases  “Common Law duties are difficult to ascertain even with in-depth legal research” .... Laurie Janik, NAR General Counsel 1999  “[Agency] Common Law is a hit-and-miss proposition. It sets forth fiduciary duties in very broad terms and leaves a lot to uncertainty…”-- Laurie Janik, NAR General Counsel 1999
  158. 158. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 158 A. Priority of Duties  Department of Real Estate Regulations  Common Law of Agency Fiduciary Duty  Contract Law Covenants
  159. 159. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 159 Priority of Duties  Common Law of Agency Fiduciary Duty  Federal Fair Housing Act
  160. 160. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 160 C. Breach of Fiduciary Duty  Misrepresentation  Lack of Further Inquiry  Dependence on “Unreliable Date Source”
  161. 161. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 161 Fiduciary Duty and Disclosure  Listing Agent’s Non-Disclosure to Buyer  Seller’s Obligations to Buyer  Third Party Providers’ Obligation to Buyer
  162. 162. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 162 Breach of Fiduciary Duty  Failure to Disclose to Seller Relationship to Buyer  Transaction Closed and Funded  Seller Refused to Pay Compensation
  163. 163. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 163 F. “Breach of TB Duty”  Transaction Broker for Seller Did Not Perform all of the Transaction Broker Duties  Transaction Closed and Funded  Seller Refused to Pay Compensation
  164. 164. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 164 Benefits  Some Benefits  Minimizing Complexity  Minimizing Uncertainty  Avoiding Appearance of Authority to Commit Client  Say “Goodbye” to Dual Agency  Responsible for “Recognized/Measurable” Standards  Providing an Agency Alternative to Client’s Benefit  Fits the other than “Substantial Services” Agreements  A Better Fit for the world of “CBA’s,” and “AfBA’s,”
  165. 165. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 165 Why All This Matters  Expanding Expectations of Service  Increased Awareness of Legal Implications  Knowledge of Points of Vulnerability  Need to for Licensees to Self-Monitor
  166. 166. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 166 Potential Downsides Transaction Broker Is Acting like an “Agent”  Forgetting that “agency is capacity”  Taking on “agency specific tasks”  Misleading others to believe transaction broker is in fact acting as “agent” of client
  167. 167. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 167 The “Duck-Theory” and Task-Specific Agency  Duck Theory…”You are not an agency UNLESS you act like an agent…”  Task-Specific Agency Services  Trustee  “Acting as Though”  Accepting Delivery and Notice  Making Objections, etc. on Behalf of Client  Accepting Power of Attorney
  168. 168. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 168 Summary  The “Wheel”  TASK and ROLE suggest RELATIONSHIP  Agency  Transaction Broker Determine which is best to perform obligations of seller or buyer agreements
  169. 169. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 169 ROLE Exclusive Representative Facilitator RELATIONSHIP Transaction Brokerage Agency Property Management New Builder Exclusive Rep Absentee Client/Customer Seller/Buyer Brokerage Building/Tenant Rep TASK Making Rational Choices
  170. 170. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 170 finis
  171. 171. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 171 When it Matters gravitas sola quanda gravis (Old Roman Proverb)
  172. 172. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 172 ROLE RELATIONSHIP TASK
  173. 173. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 173 finis
  174. 174. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 174 XII. Break-Out Discussions  Class Problem #1—Public Transportation  Class Problem #2—Meth Lab Issue  Class Problem #3—Sex Offender Issue  Class Problem #4—Financing Clause
  175. 175. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 175 XI. Break-Out Discussions  Class Problem #1—Public Transportation  Class Problem #2—Meth Lab Issue  Class Problem #3—Sex Offender Issue  Class Problem #4—Financing Clause
  176. 176. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 176 finis
  177. 177. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 177 “Designated Broker” Possible Replacement  “Designated Broker: A Qualifying Broker or Broker who is designated in writing by a Qualifying Broker to serve as Exclusive Transaction Broker or Exclusive Agent for a seller, landlord, buyer, or tenant in a real estate transaction. A Designated Broker may work with a seller or landlord in one transaction and work with a buyer or tenant in another transaction.” Lou Tulga
  178. 178. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 178
  179. 179. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 179 “Facilitator” Possible Replacement  “Facilitator: The role of a Broker in either a Dual Agency or Transaction Brokerage relationship in which the exclusive relationships between a seller or landlord client or buyer or tenant client are modified so that the Broker impartially facilitates the Transaction.” Lou Tulga
  180. 180. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 180 Listing Broker Duties--RANM Broker will: (a) Become familiar with Buyer's property requirements; (b) assist Buyer to locate suitable properties; (c) assist Buyer to locate financing; (d) assist Buyer to prepare offers (including providing information concerning comparable properties); (e) assist Buyer in negotiating acquisition terms; (f) assist Buyer in monitoring pre-closing and closing procedures; (g) act solely for Buyer in any transaction … unless otherwise specifically and expressly agreed to by Buyer in writing;
  181. 181. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 181
  182. 182. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 182
  183. 183. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 183
  184. 184. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 184 Dual Agency—What’s Missing?  There is no mention of modifications of “services provided”  There is no mention of “scope of authority” changes  There is no clarification of “modification of fiduciary duties”
  185. 185. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 185 V. Written Service Agreements  Seven Good Reasons for Written Agreements  RANM Form #1106 Listing Agreement  RANM Form #1206 Buyer Broker Agreement  RANM Form #1301 Agency—Dual Agreement  Discussion Items--Transaction Broker Dual Facilitation, Designated Representation, and Cover Page II Expansion to provide for Transaction Broker Facilitation
  186. 186. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 186 Some Good Reasons… For Transaction Brokerage with Written Agreement  It is a “trust/commitment” document Service Contract Loyalty  It expressly indicates the agreement Basic Licensee Duties  Mandatory for “exclusive relationships”47-1-45 NMSA  Code of “requires” written agreements Article Nine
  187. 187. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 187 Some Good Reasons…  Code Protection only for Exclusive Written Agreements Article 16 SOP 16-9 & 16-13  Contract Law Protection for Written Agreements  License law requires it for compensation from other party61-299-12 A 3  Contract contains “mediation clause”
  188. 188. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 188 “ For the Future” (now done in Colorado)—”Designated Representative” for In-House Transaction Brokerage Representation—Not RANM Approved! Designated Representative. “If Qualifying Broker chooses Designated Representation, Broker Firm designates to represent the Client exclusively. The designated representative will provide the Client services as transaction broker without an agency relationship…
  189. 189. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 189 “Broker Firm reserves the right to name additional designated representatives when at its discretion it is necessary. If additional designated representatives are named, Client will be informed. Only the persons designated as Client's designated representatives will be assigned to the Client…
  190. 190. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 190 “In an in-house transaction Qualifying Broker will designate another licensee to represent the Other Client exclusively. Client’s designated representative and Other Client’s designated representative will work for the same Qualifying Broker, who supervises all, transactions and maintains impartiality and safeguards confidentiality for both parties.”
  191. 191. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 191 “ For the Future” (Selection #C is NOT currently in Item #4 of Cover Page II of the RANM Form # 2103 Purchase Agreement) 4. DUAL REPRESENTATION/DUAL AGENCY/TRANSACTION BROKER FACILITATION DISCLOSURE AND CONSENT (if applicable) [ ] A. Brokerage is representing both Buyer and Seller as clients by means of a written agreement with each of them without creating dual agency, and Buyer and Seller hereby consent to this representation. [ ] B. If Dual Agency exists, prior to writing or presenting offer, obtain written authority from buyer client and seller client on RANM Form 1301, Agency Agreement - Dual. [ ]C. If Transaction Broker Dual Facilitation is to be entered, prior to writing or presenting offer, obtain written authority from buyer client and seller client modifying the existing Exclusive Agreements with consent for Transaction Broker Dual Facilitation.
  192. 192. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 192 Brokerage Service Check List (attached worksheet)  Check the “A Box” if You, as Exclusive Agent, Would Provide this Service  Check the “B Box” if You, as Exclusive Transaction Broker Would Provide this Service  Leave Both Boxes Blank, if Service Is NOT Provided Regardless of Brokerage Relationship
  193. 193. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 193 ROLE RELATIONSHIP TASK
  194. 194. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 194 #4 Issue of Extent of Fiduciary Duty  Does it Extend to the Client beyond Obligations of the Listing?  Does it Extend to Seller Client’s Other Properties that Are Not Listed?
  195. 195. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 195 #5 Issue Do Disclosure Responsibilities Differ?  Disclosure Responsibilities of Seller  Disclosure Responsibilities of Title Company  Disclosure Responsibility of Listing Agent  Disclosure Responsibility of Buyer’s Agent
  196. 196. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 196 #6 Issue of Loyalty  Competing with Former Agency Client  Effect of Contract “Hold-Over” Clause  What Constitutes a “de novo” Transaction?  Loss of Right to Get Paid
  197. 197. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 197 #7 Issue of Loyalty  Failure to Disclose  Self-Dealing  Loss of Right to Get Paid
  198. 198. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 198 ROLE RELATIONSHIP TASK
  199. 199. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 199 Remember….  Professional Services are Required Regardless of Role or Relationship  Scope of Authority—Authorizations with potential Capacity to Commit Client  Scope of Engagement—Provision of Services Only
  200. 200. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 200 VI. Task-Role-Relationship Model  Determine the TASK  Suggest the Role Suitable for TASK  Suggest the Relationship that Best Fits the Task and Role
  201. 201. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 201 ROLE RELATIONSHIP TASK
  202. 202. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 202 Why All This Matters  Expanding Expectations of Service  Increased Awareness of Legal Implications  Knowledge of Points of Vulnerability  Need to for Licensees to Self-Monitor
  203. 203. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 203
  204. 204. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 204
  205. 205. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 205
  206. 206. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 206 Transaction Brokerage Finis
  207. 207. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 207 Forms Discussion  Listing Agreement and Addendum  Dual Agency Agreement  Transaction Broker Facilitation Agreement  Purchase Agreement Cover Page II
  208. 208. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 208 IX. Making it Work  Class Problem #1: Public Transportation  Class Problem #2: Decline of Inspections
  209. 209. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 209
  210. 210. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 210
  211. 211. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 211  1. EXCLUSIVE SERVICES. The undersigned("Seller") grants to the undersigned Broker firm the exclusive right to sell the real property described in Paragraph 3. Broker will act as Seller's Transaction Broker in this transaction without creating an agency relationship. Broker and Seller will owe each other loyalty. "Sale" includes the voluntary sale, lease, exchange or other transfer of the Property or the voluntary creation of the right to acquire any interest in the Property (including a contract or lease). It is the parties' intention to minimize the likelihood that Seller will be held liable for the acts and omissions of the Broker and to eliminate the possibility that Broker is held liable to Seller under agency law.
  212. 212. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 212 What Do These Terms Mean in Real Estate Practice?  “Assistance”  “Facilitation”  “Representation”  “Advocacy”
  213. 213. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 213
  214. 214. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 214 I. Introduction  #1 Caveat Emptor and Vendor Agency  #2 Trade Associations with Ethical Standards  #3 Real Estate License Law & Commissions  #4 Courts & Consumer Protection
  215. 215. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 215 I. Introduction  New Mexico Cases  Neff v Bud Lewis (1976)  Amato v Rathbun (1982)  Gouveia v Citicorp (1984)  Easton v Strassburg (CA 1984)
  216. 216. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 216 I. Introduction  #5 Agency Understood & Effect on Buyers  #6 Buyer Agency & Dual Agency  #7 Courts & Failure to Disclose  #8 Nonagency and Transaction Brokerage
  217. 217. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 217 I. Introduction  “How We Do It”-- Licensee Responsibilities  Differences with “OLDCAR” Fiduciary Duties  Differences in Potential for Liability
  218. 218. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 218 IV. Transaction Broker Duties and Professional Standards  NAR Code of Ethics and Brokerage Relationships  Article 1-- Priority and Honesty  Article 2-- Confidentiality  Article 11--Competency  Article 16--Exclusive Relationships
  219. 219. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 219 II. Some Important Terms  Agency  Business Relationship  Facilitator  Fiduciary Duty
  220. 220. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 220 II. Some Important Terms  Nonfiduciary Duty  Principal  Professional Duty  Standard of Care
  221. 221. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 221 II. Some Important Terms Reasonable Care “That degree of care which a person of ordinary prudence would exercise in the same or similar circumstances. Due care under all the circumstances. Failure to exercise such care is ordinary negligence”
  222. 222. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 222
  223. 223. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 223 II. Some Important Terms Reasonable Care “That degree of care which a person of ordinary prudence would exercise in the same or similar circumstances. Due care under all the circumstances. Failure to exercise such care is ordinary negligence”
  224. 224. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 224 II. Some Important Terms Reasonable Care “That degree of care which a person of ordinary prudence would exercise in the same or similar circumstances. Due care under all the circumstances. Failure to exercise such care is ordinary negligence”
  225. 225. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 225
  226. 226. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 226 II. Some Important Terms Utmost Care “The standard is relative, not absolute, and sometimes regarded as no more than reasonable care measured by circumstances.”
  227. 227. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 227 II. Some Important Terms  Transaction Broker in Other States  Colorado  Florida  Missouri  Oklahoma  Tennessee
  228. 228. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 228 #1 Issue of Priority  Common Law or Rules & Regs?  Non-Fiduciary Duty  Covenant of Good Faith and Fair Dealing
  229. 229. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 229 #2 Issue of Priority  Common Law or Fair Housing Law?
  230. 230. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 230 #3 Issue of Reliable Source  Substantial Misrepresentation  Source “Deemed Reliable”  Responsibility for “Red Flags”
  231. 231. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 231 #4 Issue of Extent of Fiduciary Duty  Does it Extend to the Client beyond Obligations of the Listing?  Does it Extend to Seller Client’s Other Properties that Are Not Listed?
  232. 232. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 232 #5 Issue Do Disclosure Responsibilities Differ?  Disclosure Responsibilities of Seller  Disclosure Responsibilities of Title Company  Disclosure Responsibility of Listing Agent  Disclosure Responsibility of Buyer’s Agent
  233. 233. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 233 #6 Issue of Loyalty  Competing with Former Agency Client  Effect of Contract “Hold-Over” Clause  What Constitutes a “de novo” Transaction?  Loss of Right to Get Paid
  234. 234. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 234 #7 Issue of Loyalty  Failure to Disclose  Self-Dealing  Loss of Right to Get Paid
  235. 235. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 235 IV. Transaction Broker Duties and Professional Standards  Real Estate License Law & Regulations  Misrepresentations  Other conduct such as negligence, impropriety and incompetence  Basic Licensee Duties of NMREC Part 19
  236. 236. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 236 IV. Transaction Broker Duties and Professional Standards  Necessity for Written Contracts or Memorandums  47-1-45 NMSA 1978 Written Contracts  61-29-12 A (3) written permission required from one’s principal to receive compensation from other party to the transaction
  237. 237. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 237 Customer Service Transaction Broker  Obligations of Real Estate Law and NMREC Basic Licensee Duties  Obligation to perform all oral and written agreements with honesty and reasonable care  Liability for money damages from misrepresentation and negligence
  238. 238. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 238
  239. 239. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 239 Client Service Exclusive Transaction Broker  All Customer Service Obligations and Liabilities  Basic Licensee Duties  Performance of Promises Made  Liability for Misrepresentation & Negligence PLUS—Undivided Loyalty entered solely by Exclusive Brokerage Agreement
  240. 240. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 240 Client Service Exclusive Agency  Fiduciary duty obligations of utmost care  Liability for breach of fiduciary duties including potential for not getting paid  Implied authority to commit client by word or deed  Client liability for word or deed of agent under the scope of authority granted
  241. 241. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 241 Brokerage Service Check List  Check the “A Box” if You, as Exclusive Agent, Would Provide this Service  Check the “B Box” if You, as Exclusive Transaction Broker Would Provide this Service  Leave Both Boxes Blank, if Service Is NOT Provided Regardless of Brokerage Relationship
  242. 242. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 242 Transaction Brokerage Duties and Professional Standards  Real Estate License Law  NMREC Rules & Regulations  Basic Licensee Duties  National Association of Realtors® Code of Ethics
  243. 243. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 243 Transaction Brokerage Disclosure Requirements  “Trigger Event”  When Presenting Consumer with a Written Document that when Filled Out Could become an Express Written Agreement  Written Disclosures  Basic Licensee Duties  Existence of Your Own Listing Contracts  Licensee’s Material Interests or Relationships
  244. 244. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 244 RANM “Cover Page II”  Transaction Broker Listing Agreement  Transaction Broker Buyer Agreement  Purchase Agreement—Residential Resale
  245. 245. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 245 RANM “Cover Page II”  Transaction Broker Listing Agreement  Transaction Broker Buyer Agreement  Purchase Agreement—Residential Resale
  246. 246. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 246 Transaction Broker Services Agreement  Exclusive Right to Sell Listing Agreement  “Designated Representative”
  247. 247. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 247 Facilitation—Agency or Transaction Brokerage?  “Dual Agency” Form (RANM)  Modified Fiduciary Duties  “Transaction Brokerage Facilitation” (PES)  No Fiduciary Duties
  248. 248. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 248
  249. 249. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 249 Chart of Obligations (attached as handout)  Real Estate License Law  NMREC Rules and Regulations  Reference to Common Law  Reference to NAR Code of Ethics
  250. 250. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 250 Ockham’s Razor “pluralitas non est ponenda sine necessitate” (“Don’t make matters more complicated than is necessary”)
  251. 251. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 251
  252. 252. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 252
  253. 253. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 253 Ambiguities: Use of Terms  Assistance  Representation  Advocacy  Loyalty  Fiduciary  Advise  Facilitation
  254. 254. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 254 An Ancient Proverb “When you are in a hole and cannot get out you have several options”
  255. 255. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 255 Making Rational Choices ROLE RELATIONSHIP TASK Lou Tulga’s “Wheel”
  256. 256. 5/4/2015 Copyright (c) 2011 Lou Tulga CCIM CRB All Rights Reserved 256 Brokerage Relationship Comparison Chart: Agency  Loyalty is agreement to promote and protect client’s interests as foremost  Acceptance of CAPACITY by word or deed to commit client without further ratification under scope of authority—trustee  Acceptance of LIABILITY for breach of fiduciary duty—which includes, payment of damages, rescission of transaction and/or forfeiture of right to compensation

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