It was such a hopeful headline: The new real estate broker relationships law “protects home buyer,” it said in The Oklahoman of Nov. 11, 2000.
What it didn't say is what it took awhile for Realtors, and buyers, to figure out: “New law confuses everyone” when it comes to kinds of brokers and which kind of broker is responsible for doing what for whom in a property transaction.
Now, after a dozen years, corrections have been made again (the law was tweaked once before) — and Realtors and their regulators are happy again. The hope is that consumers will be, too.
House Bill 2524 streamlines the Oklahoma Broker Relationships Act. It comes after a two-year effort by the Oklahoma Association of Realtors and Oklahoma Real Estate Commission. It started in the House and this week passed the Senate with changes, so it now goes back to the House — and the Realtors expect it to sail to the governor's desk.
That was then
The 2000 law it aims to fix authorized two types of broker relationships, a “transaction broker” and a “single-party broker.”
A transaction broker was defined as “a broker who provides services by assisting a party in a transaction without being an advocate for the benefit of that party.” Under the law, a transaction broker was to operate as a facilitator without favoring one side over the other, and under the law a broker was presumed to be a transaction broker.
A single-party broker was defined as a broker entering into a written agreement with a party in a transaction to provide services for the benefit of that party. Single-party brokers were to operate like the traditional real estate licensee had in the past, offering a variety of services for the exclusive benefit of a customer. Under the law, single-party brokers could work with both the buyer and seller in a transaction and obtain consent from at least one party in order to become a transaction broker.
Also, a broker could be a single-party broker for one party and a transaction broker for the other party — provided that the broker had disclosed the different relationships to both parties.
It was a good idea. For years, a real estate agent was considered under common law to be the seller's agent. But in 1983, a Federal Trade Commission study found that 70 percent of buyers thought the agent was working for them. So, Oklahoma and other states decided to spell out who was responsible for what for whom.
This is now
“Since that time, there has been a lot of confusion among licensees and consumers about how this law actually works in the marketplace. Much of this confusion has focused on the differences between ‘single-party brokers' and ‘transaction brokers' as outlined in the current law,” said Lisa Noon, CEO of the Oklahoma Association of Realtors.
HB 2524 would remove the two different classes of “single-party broker” and “transaction broker” and replace them with a single definition of “broker,” with each agent having the same duties and responsibilities regardless of the transaction. Noon said the bill also would further clarify how an agent would perform when working with only one party or both parties to a transaction.
Agents “would no longer be a single-party broker or transaction broker. Everyone will be a broker with the same duties and responsibilities,” Noon said. “(Agents) can work with one client in a transaction, or they can work with both. The only thing that would be different is disclosures and brokerage agreements. Licensees can still represent one client and work for his or her benefit — this would be outlined in the brokerage agreement.”
If it becomes law, it will go into effect Nov. 1, 2013.
It makes sense to me. Except for basic duties, the bill would put questions of who does what for whom in a contract, where it probably belongs.