As most licensees hopefully are aware by now, Rule A.0104 governing agency disclosure and agreements was amended effective July 1, 2001. These recent changes and how to implement them in one's brokerage practice are the focus of the first section of the Commission's 2001-2002 Real Estate Update course, to which instructors will devote approximately eighty minutes of classroom instruction.

The primary two changes in Rule A.0104 are: 1) eliminating the lengthy "Description of Agent Duties and Relationships" which was part of every agency agreement and 2) allowing agents to work with buyers under an oral buyer agency agreement for a limited period of time.

The previous lengthy "Description" has been replaced by a more consumer-friendly brochure entitled Working with Real Estate Agents that must be reviewed with every buyer or seller at first substantial contact.

Providing this Working with Real Estate Agents brochure to all customers in a real estate sales transaction is mandatory. There is a tear-off panel that agents are to complete and have signed by the customer to acknowledge receipt of the brochure. However, this acknowledgment panel is not a contract, which is clearly written in boldface at the top of the panel.

The brochure is intended to fulfill only the disclosure requirements of Rule A.0104 and assist licensees in explaining the various agency relationship options a customer may have; it is not a substitute for a listing agreement, a buyer agency agreement (oral or written), or a dual agency agreement.

The only form the brochure does replace is the Disclosure to Buyer from Seller's Agent or Subagent. In place of this one-page form, the agent, after reviewing and discussing the brochure's contents with a potential buyer customer, may merely check a box at the bottom of the tear-off panel indicating that the agent will be working with the buyer as a seller's agent or subagent, rather than as a buyer's agent. In all instances, the customer retains the brochure and the agent retains the tear-off panel for his/her records.

The other primary change in Rule A.0104 was to allow agents to work with a buyer under an oral buyer agency agreement for a limited period of time. This is an option available to licensees; it is not mandatory.

If an agent or firm decides that they wish to continue requiring written buyer agency agreements from the inception or formation of the relationship, they may do so. However, they now have the flexibility of allowing their agents to work with buyers under an oral buyer agency agreement during the initial stages of the relationship, for reasons further explored in the Update course.

An additional caveat is that all oral buyer agency agreements must be non-exclusive; in other words, oral buyer agency agreements may not restrict the buyer's right to work either independently or with other agents and may not bind the buyer to the agent for any time period.

Oral agreements may be terminated by either the agent or the buyer at any time. The buyer agency agreement must be reduced to writing no later than the time the agent prepares an offer on the buyer's behalf. If the buyer refuses to sign a written buyer agency agreement prior to presenting the offer to the seller, then the agent is prohibited from tendering the offer to the seller or seller's agent as a buyer's agent.

The Agency section of the 2001-2002 Update materials explains briefly how and why Rule A.0104 arose, the perceived problems or tensions the old rule created between licensees and customers, the text and substance of the July 1, 2001 rule revisions, how subsections (a), (c), (d) and (e) interface with each other, and how to implement and apply these revised sections in one's real estate brokerage activities. Licensees are encouraged to take this year's Update course sooner, rather than later.