Who Represents You During A Home Sale? You Should Know the Differences Prior To Selling Your Property

Listing licensees explain to sellers that in residential sales, the Transaction Broker relationship is a limited form of representation in which a real estate salesperson can assist the seller, the buyer, or both by having all parties give up their rights to that agent’s undivided loyalty. A real estate licensee working under a Transaction Broker relationship does not represent either a seller or a buyer in a fiduciary capacity. Florida’s Transaction Broker relationship is described in Florida Statutes Chapter 475, Section 278 ( http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/Sections/0475.278.html ).

You have probably noticed that I am not using the word "agent" when referring to someone who holds a Florida real estate license and offers real estate services to the public. This is because under Transaction Brokerage, real estate licensees are not agents of either the seller or buyer. Here is a direct link to an earlier article that expands on this distinction: In Florida, are REALTORS® real estate agents? ( https://thefloridarealestateblog.com/f/in-florida-are-realtors%C2%AE-real-estate-agents ).

I am NOT an attorney. Nothing in this article or on this site can be taken as legal advice. You must speak with a Florida-licensed attorney for interpretation and application to specific circumstances.

Unless another form of representation (Single Agent or No Brokerage) is specified by separate written disclosure, a Transaction Broker relationship is established between a seller and a listing licensee's Broker when the Listing Agreement is signed, long before the property is even offered to potential buyers.

In Florida, all relationship agreements for residential real estate services are between a seller or buyer (principal) and the office's Broker, NOT the individual licensee (usually a Sales Associate) who will be directly interacting with the seller or buyer. Any form of brokerage relationship (Transaction, Single Agent, or No Brokerage) applies to all individuals whose licenses are attached to that Broker and office. Brokers who manage offices and supervise Sales Associates call Transaction Brokerage a "non-agency" relationship.

A Transaction Broker relationship does not require separate written disclosure to principals in order to apply. All relationships between Brokers and sellers/buyers in Florida are automatically Transaction unless and until a separate written disclosure changes it. (That's the "best-kept secret" part.)

This is how Florida Statute 475.278 (see the above link) establishes Transaction Brokerage as the default relationship:

" (b) Presumption of transaction brokerage. — It shall be presumed that all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established, in writing, with a customer."

A Single Agent relationship includes the fiduciary duties of Loyalty, Obedience, and Confidentiality, while a Transaction Broker relationship does not. Transaction brokerage is non-fiduciary and involves "Limited Confidentiality", which is a confusing concept to many sellers, buyers, and even real estate licensees. Florida Statute 475.278 (link above) describes and attempts to define Limited Confidentiality.

Listing Agreements indicating (or defaulting to) Transaction Brokerage establish the relationship with sellers. However, if buyers have not signed a Single Agent or No Brokerage agreement with their real estate licensee's Broker, Transaction Brokerage status automatically extends to their representation relationship.

(Important - The use of written Buyer Broker Agreements now required under the recent and widely-publicized NAR lawsuit settlement will establish licensees' and Brokers' relationships with buyers. The new requirement becomes effective between August 1 and August 17, depending on the local MLS. Look for my article on the practical application of NAR settlement terms next month.)

Local real estate Boards refer to Transaction Broker limited representation as “facilitating” the transaction and “assisting” both seller and buyer, which includes filling in some paperwork, arranging access for viewings and inspections, and referring both sides to attorneys or title companies for closing. Under a Transaction Broker relationship, buyers and sellers are referred to as customers, not clients.

Transaction Sales Associates are expected to provide marketing services and property/market information in order for sellers and buyers to make decisions on their own. Providing negotiation suggestions and/or advice may be interpreted as over-stepping the limitations of a Transaction Broker relationship.

When Transaction Sales Associates give sellers or buyers advice or opinions about whether an offered price is too low, whether or not to counter with different terms or price, or which side should pay for certain negotiable items, they may be violating the limits of their Transaction Brokerage relationships.

This could be interpreted as implied agency and is the basis for many misunderstandings (and sometimes lawsuits) between buyers, sellers, and Sales Associates and their Brokers. Even when one Transaction Sales Associate handles the seller side, and a different one handles the buyer side, both of them are there as neutral parties to facilitate the transaction and assist (not advise) both the buyer and the seller. Either one may be creating implied agency by not adhering to the limitations of Florida's Transaction Brokerage relationship.

Transaction licensees can be viewed as neutral third parties helping both buyer and seller navigate a Florida real estate deal.

Real estate attorneys tell us that handling sales and purchases under Transaction Broker relationships reduces potential liability on Brokers, offices, and companies for individual licensee errors and omissions. The majority of real estate Sales Associates in Florida operate as non-employee independent contractors to the companies where their licenses are attached.

Speak with a Florida-licensed real estate attorney for details and application on agency relationships and implied agency.

Being the default real estate brokerage relationship in Florida since 2003, Transaction Brokerage is valid, accepted, and works adequately when properly adhered to, then competently and ethically applied in actual practice. Issues and misunderstandings arise when one side (seller or buyer) feels that their interests have not been looked after or protected as well as they assumed or expected.

When interviewing real estate Sales Associates to handle your side of an upcoming deal, be sure to have each one discuss Florida's Transaction Broker, Single Agent, and No Broker relationships with you. Depending on how you would like your interests addressed, you should know the differences and have the opportunity to ask questions. Do you prefer to be a customer or a client?

Editor's Note: Christopher Carter is NOT an attorney. He does not give legal advice. For interpretation and application to specific circumstances of anything you read in this article, you must speak with a Florida-Licensed attorney.

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