Agency Agreements, Disclosure Rules Change Effective July 1

New rules governing agency agreements and disclosure (Rule A.0104) and new procedures for compliance become effective July 1.

The rule changes attempt to provide a reasonable way for buyers' agents to handle the widespread problem of buyers being reluctant to sign a buyer agency agreement at the very beginning of their relationship with a buyer's agent. Under the revised rules, brokers and salespersons may, for a limited period of time, work with a buyer as a buyer's agent under an oral (unwritten) buyer agency agreement by complying with the following procedures:

• The agent must provide and review with the buyer at first substantial contact the new Working with Real Estate Agents brochure.
• The buyer and the agent must have an oral agreement regarding the buyer agency relationship. (Note that, as a practical matter, this oral agreement needs to address all key issues of the relationship, including agent compensation.
• If the oral agreement seeks to either bind the buyer to the agreement for any specific period of time or restrict the buyer's right to work with another agent or to purchase property without the assistance of any agent, then the buyer agency agreement must be in writing.
• The agent must obtain a written buyer agency agreement not later than the time an offer to purchase is presented to the seller (or seller's agent).
• To facilitate and document disclosure to buyers and sellers at the point of first substantial contact, the Commission is publishing a new brochure explaining agency relationships.

Brokers and salespersons are required to give this brochure to buyers and sellers and receive from them signed acknowledgment of its receipt. A panel in the brochure, to be retained in agents' files, provides the form for documenting acknowledgment.