Major Surgery Needed For Real Estate "Agency" Law

Lawmakers laughed when 15 pages of real estate statutes - pasted together with Band-Aids - were unfurled during House Committee hearings at the Florida Association of Realtors' (FAR) convention last August. "Real estate statutes need major surgery, not another Band-Aid" was the message.

After four hours of lively discussion between Realtors and lawmakers, the apparent consensus was that major surgery should be pursued in the 2002 legislative session and that new statutes should "keep it simple and specific --KISS. "

Present law, Chapter 475 F.S., specifically assures "minimal" competency of real estate licensees. "That's probably the seed of the disease," said one Realtor who endorsed proposals to copy Colorado's "single licensure" statutes to increase educational requirements and require both new and established real estate "agents" to become "brokers." Many licensees attempt to function as "transaction brokers," a non-agent/non-fiduciary roll intended to reduce licensee responsibilities and potential liabilities. However, licensed "salespeople" are not actually "brokers," and they persist in calling themselves "agents." Thereby, both sellers and buyers of real estate become confused (if not misled) and licensees who attempt to act as "transaction brokers" could be perceived as being "dual agents." Florida outlawed "dual agency" in 1997.

Testimony involving Cynthia Henderson, (then) Secretary of the Department of Business and Professional Regulation (DBPR), provided evidence that well over 70% of Florida real estate "professionals" actually work in real estate part-time or no-time.

Gene Adams, vice president of governmental affairs for FAR, had told committee members last April that FAR advocates that all parties in a real estate transaction should be informed as to who represents whom. The main focus of changes to agency law over the past few years has been the timing of the disclosures. Present statutes require up to three pages of written disclosures which often include built-in "transition" (sometimes called "renege") agreements. At the April committee hearings, Representative (now Senator) Bill Posey suggested making such disclosures "simple enough to be printed on the back of business cards."

A sample business card disclosure was proposed at the August hearing by Robert Delmar, Broker/Realtor from Winter Haven. Delmar serves on the Legal/Legislative Action Committee for the National Association of Exclusive Buyer Agents (NAEBA) whose credo is "Above All Is the Consumer." Delmar also provided legislators with draft proposals to completely revise the statute in order to: keep it simple and specific; increase educational requirements; require new and established licensees to become brokers; and provide specific definitions for frequently used (often misused) real estate terms. A "Consumer friendly/Realtor friendly" business card disclosure is included in the proposed revisions.

Though FAR has yet to comment on increasing educational requirements (which might result in reducing their members and revenues), the Legislative Action Committee unanimously voted to: 1) make Transaction Brokerage (non-agent/non-fiduciary) the "presumed" relationship between licensees and consumers, and 2) require that agent/fiduciary relationships be established in writing. Both initiatives were previously endorsed by Florida members of NAEBA and later endorsed in a position paper from Todd Dantzler, FAR president.

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rev 3/16/01