When you have completed this unit, you should be able to

 distinguish the differences between the duties of single-agent brokers, transaction brokers, and brokers with "no
representation" status;
 distinguish between the terms principal and customer;
 understand the types of real property transactions requiring that licensees disclose the broker's relationship to
buyers and sellers; and
 list the different disclosure forms a licensee must give to buyers and sellers of residential property and
understand the uses of each.
 Brokerage Relationships
 While the law of agency is clear and straightforward, its application to the real estate brokerage business is
quite complex. This Unit updates licensees concerning broker's relationships with parties to transactions and
the disclosure requirements of Florida law.

 The laws of agency govern the dealings between single-agent brokers and their principals. They are the
product of common law, case law, and statute.

Brokerage Relationship Disclosure Act

The Brokerage Relationship Disclosure Act is important to licensees in two principal areas:

 It describes the type of brokerage relationship a licensee may have with a customer. This section of the law
applies to all licensees.
 It requires disclosure of the brokerage relationship a licensee has with a customer. This section of the law applies
only to licensees dealing in residential property sales.

Authorized Brokerage Relationships

A real estate licensee may have brokerage relationships with potential buyers and sellers, either as single agents or
as transaction brokers. It is illegal for a licensee to be a dual agent. A licensee may also work with a customer with no
brokerage relationship.

It is legally presumed that all licensees are operating as transaction brokers unless single-agent or no brokerage
relationships are established, in writing, with customers. [475.278(1)(b), F.S.]

The broker determines the type of relationship he or she will have with a buyer or a seller. If a single-agency
relationship is established with a residential seller, all licensees in that brokerage firm have single-agent duties to the
seller. It is not legal for another sales associate in the firm to represent a buyer or be a transaction broker when
showing a buyer that seller's property. A sales associate may not decide the type of relationship without the broker's
consent.
After a brokerage relationship has been established, a licensee may change from one brokerage relationship to
another. The licensee must make the appropriate disclosure of duties to the principal, and the principal must give
written consent before the change. A customer is not required to enter a brokerage relationship with any real estate
licensee. [475.278(1)]

All licensees have the legal duties of

 fair and honest dealing with customers;

 disclosure of known facts that materially affect the value of residential property and that are not readily
observable to the buyer; and
 accounting for all funds.

Additional duties are imposed on single agents and transaction brokers.

Disclosure Requirements
Single agents and licensees with no brokerage relationship must disclose their status to customers only in residential
real estate sales. Residential sales are defined as the sales of

 improved residential property of four units or less;

 unimproved residential property intended for use as four units or less; and
 agricultural property of ten acres or less.

Disclosure Limitations
The real estate disclosure requirements of this section do not apply

 when a licensee knows that the potential seller or buyer is represented by a single agent or a transaction broker;
 when an owner is selling new residential units built by the owner and the circumstances or setting should
reasonably inform the potential buyer that the owner's employee or single agent is acting on behalf of the owner,
whether because of the location of the sales office or because of office signage or placards or identification
badges worn by the owner's employee or single agent;
 to nonresidential transactions;
 to the rental or leasing of real property, unless an option to purchase all or a portion of the property improved with
four or fewer residential units is given;
 to a bona fide "open house" or model home showing that does not involve eliciting confidential information, the
execution of a contractual offer or an agreement for representation, or negotiations concerning price, terms, or
conditions of a potential sale;
 to unanticipated casual conversations between a licensee and a seller or buyer that do not involve eliciting
confidential information, execution of contractual offers or agreements for representation, or negotiations
concerning price, terms, or conditions of a potential sale;
 when responding to general factual questions from a potential buyer or seller concerning properties that have
been advertised for sale;
 to situations in which a licensee's communications with a potential buyer or seller are limited to providing general
factual information, oral or written, about the qualifications, background, and services of the licensee or the
licensee's brokerage firm;
 to auctions, appraisals, and dispositions of any interest in business enterprises or business opportunities, except
for property with four or fewer residential units; and
 to licensees acting as transaction brokers.

If a licensee will be a single agent, the licensee must provide disclosure before or at the time of entering into a listing
agreement or a buyer representative agreement or before the showing of property, whichever occurs first. If a
licensee will not be representing a customer in any capacity, the licensee must give the customer a No Brokerage
Relationship Notice before showing a property.

There are three different disclosure notices that may be given to buyers or sellers of residential property:

1. Single-Agent Notice
2. Consent to Transition to Transaction Broker Notice
3. No Brokerage Relationship Notice

Transaction Broker Relationship (1 of 7)

Under the law, licensees are presumed to be transaction brokers. A transaction broker provides limited
representation to a buyer, a seller, or both in a real estate transaction, but does not represent either in a fiduciary
capacity. The licensee is not an advocate for either party. The licensee must treat the parties fairly and not work for
one party to the detriment of the other. The customer is not the broker's principal and is not responsible for the acts of
the licensee.

Transaction Broker Duties

The duties of the transaction broker include the following:

1. Dealing honestly and fairly

2. Accounting for all funds
3. Using skill, care, and diligence in the transaction
4. Disclosing all known facts that materially affect the value of residential real property and are not readily
observable to the buyer
5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensees
otherwise in writing
6. Limited confidentiality, unless waived in writing by a party. The transaction broker may not reveal to either party
the following information:
  That the seller might accept a price less than the asking or list price
 That the buyer might pay a price greater than the price submitted in a written offer
 The motivation of any party for selling or buying property
 That a seller or buyer will agree to financing terms other than those offered
7. Any other information requested by a party to remain confidential
8. Any additional duties that are entered into by this or by a separate agreement

Creation of a Transaction Brokerage Relationship

Transaction brokerage relationships can begin in one of two ways:

 The broker chooses to be a transaction broker in all transactions.

 A single-agent broker becomes a transaction broker to facilitate the transaction and to sell one of the firm's
listings.

The broker chooses to be a transaction broker in all transactions

Some brokers recognize the increased liability because of the complexities of the disclosure requirements and the
need for their sales associates to remember which "hats" they are wearing in specific transactions. Customers and
licensees can become confused if the licensee is a single agent for a buyer until showing the firm's own listings and
then changes to a transaction broker.

For this reason, many brokers have established the policy that their firm will act as transaction brokers in every
situation with every customer. (The only time the policy might change is the rare situation when a customer wishes
the broker to have "no brokerage relationship" status.) All licensees in the firm then have the same role in every
transaction, reducing the chance of the licensees' inadvertently violating their legal duty.

A single agent becomes a transaction broker to facilitate the transaction

The need for a single agent to become a transaction broker frequently occurs when the buyer and seller are working
with the same brokerage firm.

Neither party will want to be unrepresented in the transaction and might request that the single agent take the middle
ground between the parties and become a transaction broker. This status makes it easier for a broker to sell his or
her own listing. The next section describes the steps necessary to change from a single agent to a transaction broker.

Disclosure of Transaction Broker Relationship Deleted

Licensees are no longer required to give customers a Transaction Broker Notice. The duties of a transaction broker
are not eliminated, only the requirement to give the form to the customer.

In Practice

Nothing in the law says you can't use it

If you are working as a transaction broker and get a question from a customer about what that status means, you
may still use the old form and go over your duties with the customer. It is also helpful to show the customer what you
cannot do (discuss the price a seller might accept, etc.). The form is included in the Forms-to-Go section.

Single-Agent Relationship (1 of 5)
A single agent represents, as a fiduciary, either the buyer or seller but not both in the same transaction. Being a
single-agent broker does not mean, however, that there must be two brokers in every transaction. For example, a
single-agent broker who represents the seller may work with a buyer as a nonrepresentative.

Fiduciary Relationship

A fiduciary relationship is a position of trust and confidence in which the fiduciary is entrusted to manage the property
of the principal. The principal relies on the real estate single agent to give skilled and knowledgeable advice and to
help negotiate the best transaction in dealings with the customer. Because only a single agency creates a fiduciary
relationship, only single agents may call their customers principals. Once a single-agent relationship is created, the
law requires that the agent place the interests of the principal above the interests of everyone else, including those of
the agent. The principal is responsible for the acts of his or her single agent.

Creation of Single-Agent Relationships

A single-agent relationship results from mutual consent between the principal and the agent. The broker requires only
the principal's specific authorization to represent him or her. A single agency is not created simply because a licensee
performs a service for a customer. Payment of a commission is not a factor in creating a single-agent relationship. A
single agent does not need a written contract or compensation for an agency relationship to exist.

Single-Agent Duties

A single agent owes nine specific duties to a buyer or seller:

1. Dealing honestly and fairly

2. Loyalty
3. Confidentiality
4. Obedience
5. Full disclosure
6. Accounting for all funds
7. Skill, care, and diligence in the transaction
8. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee
otherwise in writing
9. Disclosing all known facts that materially affect the value of residential real property and are not readily
observable
Single-Agent Notice

The duties of a single agent must be disclosed in writing to a buyer or seller. It may be a separate and distinct
disclosure document or part of another document, such as a listing agreement or a buyer's representation agreement.
The disclosure must be made either before or at the time of entering into a listing agreement or an agreement for
representation or before the showing of property, whichever occurs first. In 2006, the form was changed to remove
the "Important Notice" section. The Single-Agent Notice is included in the Forms-To-Go section.

The notice should be signed. If a principal refuses to sign a Single-Agent Notice, the licensee may still work as a
single agent for that person but should note on the form that the principal declined to sign.

Transitioning From Single Agent (1 of 3)

When a single agent for one party begins working with a party who is likely to be on the other side of the transaction,
it is likely that the agent will change to a transaction broker to treat both parties fairly. The fiduciary duty of
confidentiality continues for the single agent who becomes a transaction broker. The licensee must keep confidential
any information that has been learned during the single agency and that would cause harm or damage the former
principal.

Example:

Broker James listed the Smiths' house as their single agent. Sally, a licensee in Broker James's office, is working as
the single agent for a buyer, Mr. Farley. Mr. Farley becomes interested in the Smiths' house. Because the broker
cannot represent both parties (dual agency), the broker obtains the informed written consent of both parties for him to
switch to transaction broker status.

Consent to Transition to Transaction Broker Notice

The Consent to Transition to Transaction Broker Notice allows a single agent to change his or her brokerage
relationship to that of a transaction broker. It must be provided before or at the time of changing the brokerage
relationship from single agent to transaction broker. The Consent to Transition to Transaction Broker Notice is in the
Forms-To-Go section.

The principal must sign the notice before the single agent may change to transaction broker status. This is the only
brokerage relationship notice that must be signed before the licensee can continue in the transaction. This form may
be included in a listing or representation agreement and be authorized at the outset of the single-agent relationship.
The single-agent broker must disclose the fact before changing to transaction broker.

In practice, many licensees who are single agents will have the principal sign the Consent to Transition to
Transaction Broker Notice when the Single-Agent Notice is given. The forms are usually included as part of listing
agreements and buyers' representation agreements.

In Practice

Switching from transaction broker to single agent

If you are working with the seller as a transaction broker and the buyer has a single agent who is a strong advocate
on how to structure a transaction, you may legally decide to change hats and become a single agent for your seller to
give stronger representation. Just make sure disclosures are given to all parties.

No Brokerage Relationship (1 of 3)
Licensees working with a customer without a brokerage relationship owe the customer the following duties:

 Dealing honestly and fairly

 Disclosing all known facts that materially affect the value of the residential real property that are not readily
observable to the buyer
 Accounting for all funds entrusted to the licensee

Occasionally, a single agent for one party in a transaction decides to work with the other party as a
nonrepresentative. In fact, before the practice of buyer brokerage became popular, most brokers worked for sellers,
and buyers were not represented in the transaction. If a broker does not have a brokerage relationship with a
customer, and is a single agent for the other party, the customer is at a disadvantage. It is the duty of the single agent
to work diligently for the principal and obtain the best price and terms.

If a licensee is a principal in the transaction, either as a buyer or a seller, it would be difficult to believe that the
licensee would be representing both sides fairly. Therefore, the licensee should give the other party a No Brokerage
Relationship Notice before proceeding.

No Brokerage Relationship Notice

A licensee must give a No Brokerage Relationship Notice to the party the licensee works with but does not represent.
It may be a separate and distinct disclosure document or part of another document, such as a listing agreement or a
buyer's representation agreement. The disclosure must be given to all prospective buyers and sellers of residential
properties who are not represented by a broker in a transaction broker or a single-agency relationship before showing
them. The notice need not be signed. In 2006, the required form was changed to remove the "Important Notice"
section at the top. The notice is included in the Forms-To-Go section.

Quick Chart of Licensee’s Brokerage Relationship Duties

This chart is designed to help you quickly locate the duties depending on your brokerage relationship status.
The Designated Sales Associate
Florida law allows a brokerage firm to designate one sales associate in the firm to act as agent for the buyer (or
lessee) and another sales associate in the firm to act as the agent for the seller (or lessor). This status may be used
only in a nonresidential transaction. In this status, each designated sales associate is an advocate for the party he or
she represents in the transaction, and each can actively help in the negotiations. To meet the requirements of the
law, buyers and sellers must each have personal assets of at least $1 million, must sign disclosures that each
person's assets meet the requirement, and must request this representation status. The licensees must give the
parties the Designated Sales Associate Notice and a Single-Agent Notice. As a matter of practice, many firms now
use a combined form that includes all the required information. A sample notice is shown in the Forms-To-Go section.

Example:

Big Bagels, Inc., is searching for five store locations in Sarasota. It engages Mary Perez of Sarasota Commerce
Realty as a single agent because of her knowledge and expertise in the Sarasota fast-food field.

Mary finds a site listed by another sales associate in her firm. Big Bagels, Inc., wants Mary to be its single agent, so
the broker appoints Mary as a single agent for Big Bagels, Inc., and Jack as single agent for the seller. They are now
designated sales associates.

Retaining Brokerage Relationship Disclosure Documents

Brokers must keep copies of disclosure notices for all residential transactions that result in written sales contracts for
at least five years. It does not matter whether the sales close. DBPR investigators review brokerage relationship
disclosure notices during office inspection visits.
Property Manager Fails to Notify the FREC of a Dispute Over a Rental Deposit

Facts: Broker Samuels accepted a $25 application fee and $585 as a holding deposit for a rental unit. If Ms.
Markham, the prospective tenant, was deemed qualified, she would receive a lease. The property was taken off the
rental market during the credit check period, after which the tenant was approved. Ms. Markham changed her mind
about the rental unit and requested a refund of the holding deposit. Broker Samuels sent Ms. Markham a notice of his
intent to keep the rental deposit in conformance with Subsection 83.49(3), F.S., and delivered the deposit to the
property owner. No notice was sent to the FREC about the dispute over the deposit.

The DBPR charged the broker with failure to account and deliver escrowed property, citing the fact that Ms. Markham
never signed a lease, possessed keys, or had the right to occupy the unit.

Broker Samuels countered that Subsection 83.49(3) supersedes Chapter 475 in this regard, that he complied with the
appropriate statutes, and that the conflicting demands requirements of Chapter 475, F.S., did not apply. The law
judge ruled that the broker did not violate the law.

Property Manager Fails to Notify the FREC of a Dispute Over a Rental Deposit

What Really Happened? The administrative law judge (ALJ) found in favor of Samuels. The ALJ agreed with
Samuels' position that the application clearly evidenced the parties' intent to create a landlord and tenant relationship,
and the fact that the lease was not executed did not change the nature of the transaction. The ALJ said the evidence
failed to show any failure to account or deliver funds and recommended that the DBPR enter a final order dismissing
the administrative complaint against Samuels.
Map # Property Name Date Price Units RSF SF/Unit Age Per Unit Per SF CAP Occ Submarket
1 Park South at Deerwood Jan-15 $19,560,000 240 228,000 950 1982 $81,500 $85.79 5.5 97% Southside Blvd.

2 Villages of Baymeadows May-14 $84,000,000 1,048 1,272,508 1,214 1971-1983 $80,153 $66.01 6.4 96% Southside

3 Elements of Belle Rive Sep-13 $17,700,000 200 217,900 1,090 1989 $88,500 $81.23 6.7 95% Southside Blvd.

4 Fountains at Deerwood (formerly Chase Oaks) Jun-13 $18,000,000 240 269,200 1,122 1975 $75,000 $66.86 6.5 98% Southside Blvd.

5 Aqua (formerly Reserve at Deerwood) Jun-13 $17,400,000 226 244,166 1,080 1980 $76,991 $71.26 6.0 97% Southside Blvd.

6 Aqua II (formerly Avistele at Deerwood) Nov-12 $28,210,000 390 391,694 1,004 1986 $72,333 $72.02 5.9 96% Southside Blvd.

7 Bay Club Oct-12 $18,850,000 220 223,568 1,016 1990 $85,682 $84.31 6.2 90% Southside Blvd.

8 Landmark at Hampshire Place (formerly Royal Oaks) Oct-12 $23,500,000 284 260,440 917 1991 $82,746 $90.23 6.4 96% Southside Blvd.

9 Landmark at Sage Commons (formerly Waterford at Deerwood) Oct-12 $19,500,000 248 246,820 995 1985 $78,629 $79.00 5.7 96% Southside Blvd.

10 The Antlers Jun-12 $29,000,000 400 331,780 829 1985 $72,500 $87.41 6.0 96% Southside Blvd.

11 St. Johns Plantation Jun-12 $33,000,000 400 385,628 964 1990 $82,500 $85.57 6.5 94% Southside Blvd.

AVERAGES $28,065,455 354 370,155 1,017 1985 $79,240 $75.82 6.2 96%

AUBURN GLEN $16,500,000 251 204,090 813 1974 $65,737 $80.85 6.3* 97%