New disclosure law creates confusion

January 22, 1995|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Home sellers and buyers have been scratching their heads over a new state law designed to clarify types of real estate agency relationships in Maryland.

Agents must now explain the ways in which they're legally permitted to represent buyers and sellers, who in turn must officially make their choice in writing. But the new law -- in effect since Jan. 1 -- has initially proven more confusing than helpful, as agents and managers grapple with presenting a new set of disclosure forms to clients and customers.

"I think it's going to be OK eventually, but it's still new to everyone," said Walter F. McGuire Jr., sales manager with O'Conor, Piper & Flynn's Towson North office. "The two state forms being required on their own come close to telling the whole story, but the interpretations being made are the dangerous part. There are some gray areas."

At the Greater Baltimore Board of Realtors, Joseph McGraw, the assistant executive vice president and legislative counsel, has been fielding questions from perplexed agents and consumers for the past several weeks.

All buyers and sellers must sign the first form -- for sellers, at the time of listing; for buyers, at the first scheduled meeting -- which explains the four types of real estate relationships now permitted. They include:

* Seller's Agent:

A licensed broker, associate broker or salesperson who lists a property for sale. The agent, paid by the seller, represents only the seller. Even when the agent shows property to a buyer, he or she still only represents the seller.

* Co-operating Agent:

A licensed real estate broker, associate broker or salesperson who is not affiliated with the broker who listed the property. The cooperating agent helps buyers find homes, but still is representing, and is paid by, the seller.

* Buyer's Agent:

A licensed broker, associate broker or salesperson who exclusively represents the buyer, but can also assist sellers. Either the buyer or seller can pay the agent's fee.

Most of the confusion centers around the fourth type of $l arrangement, that of dual agency. A broker who represents both the seller and the prospective buyer of a property acts as a dual agent.

"The General Assembly was of the opinion there was some ambiguity in the law," Mr. McGraw said. "Can you legally have dual agency?"

According to licensing law, dual agency was permitted as long as buyers and sellers consented and understood. But court opinions implied otherwise. The new law lays out a set of guidelines for dual agency, he said.

Buyers and sellers who accept the dual agency must sign a second consent form, and the firm must designate separate agents for them.

"The dual agency aspect is still confusing to agents and %J customers and clients," Mr. McGuire said, because when an agent working for a buyer shows his own company's listing, "we are creating a situation that may confuse the buyer, with regard to who we're working for."

The new law applies to all sellers listed with real estate agencies as of Jan. 1. Some agencies have met with clients or notified them by sending out letters requesting they sign the forms.

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