Which of the following is something a licensee would typically do for a buyer customer

Q: I understand that real estate licensees may provide ministerial acts in a residential real estate transaction. What is a ministerial act?

A: Traditionally, a real estate licensee may assist a non-client in certain pre-contractual matters in a residential transaction and in post-contractual matters relative to completing certain contingencies in the written contract of sale.

For example, a seller’s agent or subagent working with a non-client buyer would typically be involved in pre-qualifying the buyer and assisting the buyer in arranging for a home inspection, termite inspection, well and septic inspection, loan application and other necessary matters to bring the transaction to settlement. Even though the licensee represents the seller, he/she is working closely with the non-client buyer to assist him/her in fulfilling these contractual matters.

Similarly, a licensee representing a buyer in the purchase of a home for sale by owner, may provide similar assistance to the seller to complete post-contract matters and facilitate settlement. These acts, which assist a non-client, are “ministerial acts”.

A “ministerial act” under the law cannot involve the discretion and exercise of judgment by the licensee. In other words, the licensee may assist the non-client in providing such services, but it must be the non-client who ultimately makes all decisions relative to any pre- or post –contract matters. For example, if the contract of sale is subject to a home inspection, the licensee may assist the non-client buyer in arranging the date, time and place of the home inspection as well as making contact with the home inspector to schedule and complete the home inspection. However, the buyer must select the inspector and decide the date, time and place of the inspection. In other words, the licensee makes no independent decision as to these matters. Consequently, the services the licensee provides regarding the home inspection qualify as a ministerial act.

The only condition required under the law regarding ministerial acts is that the written agreement between the licensee and the licensee’s client (i.e., the listing agreement or buyer agency agreement) must contain a statement by the client authorizing the licensee to provide these ministerial acts on behalf of a non-client. Most listing agreements and buyer agency agreements include the required notice and consent.

Q: Please walk me through the process for completing the Consent for Dual Agency form, especially the “AFFIRMATION” section on the bottom of the second page.

A: Generally, the seller and buyer consent to dual agency before the dual agency actually arises. The seller typically signs the consent form with the listing agreement and the buyer signs it when the buyer broker agreement is signed. At this point, however, no dual agency has occurred. 

The current Consent for Dual Agency form contains, on page 2, two subparts. The first subpart is for the seller/buyer to consent in advance for the listing/buyer broker to act as a dual agent in the sale/purchase of property (the seller specifies the property address). The second subpart of the form requires the affirmation of the seller/buyer when the actual dual agency occurs. The seller must sign the second subpart, affirming the advance consent for dual agency for the buyers identified below. The buyer must sign the second subpart, affirming the advance consent for dual agency for the property identified below.

The 2016 changes to the Broker’s Act clarified previous law regarding at what point the Affirmation must be signed by the parties. Maryland law states: 

The written consent for dual agency shall include an affirmation that identifies the property and the buyer when the real estate broker or branch office manager is serving as a dual agent and the buyer and seller or lessee and lessor enter into a written contract for sale or for a lease, respectively.

Thus, the updated law is consistent with the practices many brokers and licensees had adopted previously.  We recommend that brokers and managers review office policy with legal counsel to ensure compliance.

Q: I am the broker for a small company and I still take listings. If another agent in my office has a buyer client interested in my listing, how can we make dual agency work?

A: First, some background.  For this analysis, we assume both buyer and seller have executed written brokerage agreements and signed the Consent for Dual Agency form published by the Maryland Real Estate Commission.  A real estate company needs at least three licensees to participate in dual agency.   Only a broker or branch office manager designated by the broker may act as a dual agent and the dual agency provisions of the Maryland Real Estate Brokers Act must be complied with. 

Once the dual agency form is executed, the broker or the broker’s designee becomes the dual agent.  The dual agent assigns one real estate agent from the company to represent the seller.  This person is the seller’s intra-company agent.  The dual agent assigns another agent from the company to represent the buyer.  This agent is the buyer’s intra-company agent.  The intra-company agents must provide the same services to their clients as an exclusive seller’s or buyer’s agent, including advising their clients as to price and negotiation strategy.

If either the buyer or seller refuses to consent in writing to the dual agency, the broker may withdraw from representing the client who refuses to consent.  The withdrawal may not prejudice the ability of the licensee to continue to represent the other client in the transaction nor to limit the licensee from representing the client who refused to consent to dual agency in transactions not involving dual agency.

A broker who is also the listing agent may not act as the intra-company agent for the seller.  As mentioned above, assuming both parties have signed the Consent to Dual Agency form, the broker or designee is the “dual agent” in the transaction. The designee must be a manager who already has supervisory responsibilities.  That person then assigns one licensee affiliated with the firm to be the intra-company agent for the seller and assigns another licensee at the firm to be the intra-company agent for the buyer. Because you are the broker, even if you designate the branch manager to act as the dual agent, that person may not appoint you to be an intra-company agent.  

That said, there are 2 ways to make dual agency work in this situation.  The first is for the broker to assign the listing to another agent in the office, take on the role of the dual agent and assign the other agent as the intra-company agent representing the seller.  As a practical matter this may not be ideal, especially if the broker, because of some particular expertise, is the reason the firm obtained the listing in the first place.  

The second way to make it work is to avoid dual agency for this property.  As noted above, if the buyer refuses to consent to dual agency for this property, your company may withdraw your representation of the buyer, continue to represent the seller, and offer to assist the (now unrepresented) buyer as the seller’s agent.  You must be careful to perform only “ministerial acts” on behalf of the buyer.

Finally, dual agents and intra-company agents must keep confidential information about a client’s bargaining position or motivations unless the client gives written consent to disclose the information.  However, like all agents, a dual agent and an intra-company agent must disclose any material facts about a property to the other party. 

Q: Once the seller/lessor signs the listing agreement, must I give seller/lessor the Understanding Whom Real Estate Agents Represent form so that the seller/lessor can acknowledge that I represent the seller/lessor?

A: No. The Understanding Whom Real Estate Agents Represent form is not required to be signed by a client with whom you have entered into a brokerage agreement.

Q: Once the buyer/tenant signs the buyer/tenant broker agreement, must I give the buyer/tenant the Understanding Whom Real Estate Agents Represent form so that the buyer/tenant can acknowledge that I represent the buyer/tenant?

A: No. The Understanding Whom Real Estate Agents Represent form is not required to be signed by a client with whom you have entered into a brokerage agreement.

Q: Must I provide the Understanding Whom Real Estate Agents Represent form at an open house?

A: No. You are in compliance with the law if you post the Open House Notice prepared by the Maryland Real Estate Commission in a conspicuous place about the property. This document may not be altered, must be displayed in at least 8.5" x 11" size, in color, and remain on the Maryland Real Estate Commission letterhead. You may download the open house disclosure at: https://www.dllr.state.md.us/forms/mrecopenhouse.pdf.

Q: What must I disclose if the first contact between a buyer’s agent and an unrepresented seller/lessor is not a face-to-face?

A: If the first contact with an unrepresented seller/lessor is not face-to-face, the buyer’s agent shall disclose through medium in which contact occurred that the buyer’s agent represents the buyer. Not later than the first scheduled face-to-face contact with the unrepresented seller/lessor, the buyer’s agent must provide the unrepresented seller/lessor with a copy of the Understanding Whom Real Estate Agents Represent form so that the unrepresented seller/lessor can acknowledge that the agent represents the buyer.

Q: What must I disclose if the first contact between a seller’s agent or subagent and an unrepresented buyer/lessee is not face-to-face?

A: If the first contact with an unrepresented buyer/lessee is not face-to-face, the seller’s agent or subagent shall disclose through medium in which contact occurred that the seller’s agent or subagent works for the seller. Not later than the first scheduled face-to-face contact with the unrepresented buyer/lessee, the seller’s agent or subagent must provide the unrepresented buyer with a copy of the Understanding Whom Real Estate Agents Represent form so that the unrepresented buyer/lessee can acknowledge that the seller’s agent or subagent represents the seller.

Q: When is a licensee required to provide the Understanding Whom Real Estate Agents Represent form?

A: A real estate licensee must provide the Understanding Whom Real Estate Agents Represent form to a NON-REPRESENTED PARTY not later than the first scheduled face-to-face contact with the NON-REPRESENTED PARTY. If the NON-REPRESENTED PARTY refuses to sign the form, the licensee may self-certify that the licensee made the required disclosure.

Q: Can a licensee who previously acted as a subagent or seller’s agent switch hats and represent the buyer?

A: A REALTOR® who acted as a seller’s agent or subagent at the time of an initial showing of a listed property is not precluded from thereafter acting as a buyer's agent for the buyer. We recommend having the seller acknowledge that the other agent in the transaction initially worked for the seller as a subagent or seller’s agent and now represents the buyer. If the agent learned any confidential information about the seller while working as a subagent or seller’s agent, Maryland law requires that the agent maintain seller’s confidentiality. The MAR Statewide Forms Committee is preparing a Seller Acknowledgement form that will be available for use on October 1, 2017.

Q: What is a subagent?

A: “Subagent” means a licensed real estate broker, licensed associate real estate broker, or licensed real estate salesperson who:

     (1)   is not affiliated with or acting as the listing real estate broker for a property;

     (2)   is not a buyer’s agent;

     (3)   has an agency relationship with the seller or lessor; and

     (4)   assists a prospective buyer or lessee in the acquisition of real estate for sale or for lease in a nonagency capacity.

Q: Is there a document I can use to help explain Maryland Agency law to my clients?

A: Yes. MAR has prepared a brochure that you can use to discuss Maryland Agency law with your clients. You may access the document at: http://www.mdrealtor.org/Portals/0/adam/Content/zQqLmRTjx0O627gO98GNJQ/Link/FINAL-Brokerage-Chart-Web.pdf

Q. Does the Broker’s Act require real estate licensees to list their license category in all advertising that involves the sale, rent, or offer to purchase real property?

A. The Maryland Attorney General’s Office has issued an Advice of Counsel letter to the Real Estate Commission regarding the use of statutory license categories in all advertising that involves the sale, rent, or offer to purchase real property.

The Memorandum indicates that the Real Estate Brokers Act does not contain a general mandate that the statutory license categories broker, associate broker, or salesperson must be used in such advertising. Rather, the statute contains a limited requirement that a licensee who offers to buy or sell property for his or her own account must disclose that they are licensed by the Commission in advertising relating to such properties.

While the Opinion leaves licensees free to decide whether or not to include their license category in advertising, the Commission and Counsel advise licensees to avoid using other terms that could mislead or cause consumer confusion. For example, a licensed salesperson should not use the term "sales associate," because there is a statutory licensing category "Associate Broker." The use of the term “associate” in any context other than Associate Broker could confuse a consumer and therefore should be avoided.

Q. What are the requirements for real estate advertisements in the state of Maryland? Am I required to use the Equal Housing Opportunity and REALTOR® logos?

A. Maryland law requires that all advertisements include your name (as listed on your pocket card) and the name of the company with which you are affiliated (not simply the company logo). Both names must be meaningfully and conspicuously placed in the ad. While the phrase “meaningful and conspicuous” may seem subjective, we strongly advise members to use a common sense approach to advertising.

The guiding principle for these regulations is to minimize consumer confusion. We recommend that you show your proposed advertising to a neighbor or someone unfamiliar with the real estate industry. If that person is able to quickly identify the licensee and the company for whom the licensee works, the ad would most likely acceptable to the Real Estate Commission. If not, the ad may be considered misleading.

If an individual (personal) telephone number or web address is included in the advertisement, the office telephone number must be listed as well. The purpose for this rule is to provide a consumer with direct access to a broker or manager without the necessity of first contacting the agent.

Additionally, both Maryland law and the National Association of REALTORS® (NAR) Code of Ethics prohibit licensees and REALTORS® from advertising in a misleading or untruthful manner. In other words, you must be careful at all times to present a true and accurate picture in your advertising and representations to the public.

With respect to the Equal Housing Opportunity logo, federal law dictates that all advertisements should include the Equal Housing Opportunity logo. Finally, members of NAR may use the REALTOR® logo. For additional information regarding proper usage of the REALTOR® logo, click on the following link: https://www.nar.realtor/logos-and-trademark-rules/logo-trademark-faq.

An individual who has submitted an application for tenancy have a service dog or comfort animal?

There are three important points to consider when renting to an individual with a disability who requires a service animal.

(1) Service animals, therapy animals, emotional support animals or animal aides all fall into the same category under federal law.

(2) Service, therapy, emotional support or assistance animals are NOT pets and therefore may not be considered as such. Landlords who have strict no-pet policies may not enforce them with regards to service animal. The Landlord cannot charge a pet deposit.

(3) Assistance animals are covered under the Fair Housing Amendments Act, Americans with Disabilities Act and the Rehab Act.

Under the Fair Housing Act, persons with disabilities who are accompanied by a service animal are a protected class. To be an individual protected under the Fair Housing Act, that person must have a disability as defined by the act; the service animal must have a direct function related to the individual’s disability and the request to have the service animal must be reasonable.

The Fair Housing Act requires owners of housing facilities to make reasonable exceptions in their policies and operations to afford people with disabilities equal housing opportunities. A housing provider may not ordinarily inquire as to the nature and severity of an individual's disability. However, if an individual makes a request for a reasonable accommodation, a housing provider may request reliable disability-related information that (1) is necessary to verify that the person meets the Act’s definition of disability (i.e., has a physical or mental impairment that substantially limits one or more major life activities), (2) describes the needed accommodation, and (3) shows the relationship between the person’s disability and the need for the requested accommodation. Depending on the individual’s circumstances, information verifying that the person meets the Act's definition of disability can usually be provided by the individual. A doctor or other medical professional, a peer support group, a non-medical service agency, or a reliable third party who is in a position to know about the individual's disability may also provide verification of a disability. In most cases, an individual's medical records or detailed information about the nature of a person's disability is not necessary for this inquiry.

Once a housing provider has established that a person meets the Act's definition of disability, the provider's request for documentation should seek only the information that is necessary to evaluate if the reasonable accommodation is needed because of a disability. As stated above, a housing provider may not ask for details or the nature of an individual’s disability. 

With regard to whether service animals must be specially trained or certified, the Fair Housing Act does not require that a service animal be individually trained or certified. While dogs are the most common type of assistance animal, other animals can also be assistance animals. 

Does a licensed real estate professional become a foreclosure consultant

Yes. At the outset, helping a past client who is currently in trouble with his mortgage to refinance or restructure the loan is beyond the scope of your real estate license and could subject you to disciplinary proceedings before the Real Estate Commission. The best practice would be to refer the past client to a reputable and competent counseling agency that has staff trained in working with folks who are in trouble with their mortgage.

If you do not refer these clients, please be aware that under PHiFA licensees will almost certainly become “foreclosure consultants” if they engage in this kind of activity. [§7-301(C)(1)] Once you have been defined as a foreclosure consultant, you take on a whole host of obligations and prohibitions to that homeowner in default, including:

Providing the homeowner with a foreclosure consultant agreement with the required disclosures. [§7-306]

Refraining from engaging in the prohibited activity listed under [§7-307].

Presenting a copy of your real estate license to the homeowner no later than when the foreclosure consulting contract is executed. [§7-308]

Providing the homeowner with written copies of any research done by the consultant regarding the value of the residence in default, including any information on sales of comparable properties or any appraisals. [§7-309(a)]

Providing to the homeowner in default the same duties that you would owe a client under §17-532 of the broker’s act. [§7-309(b)]

Give the homeowner the 5-day right of rescission on the contract of sale. [§7-310]

Making sure that the purchaser provides the required disclosure to the homeowner if you arranged for the sale or transfer of the residence in default as part of the foreclosure consulting contract. [§7-311]

Engaging in these types of activities is almost certainly beyond the scope of your real estate license, and carries increased risks. You should speak with your broker, and perhaps with legal counsel, before engaging in such activities.

Is a licensed real estate agent, who represents a buyer under a buyer agency agreement

No. To be considered a foreclosure consultant under PHiFA, the REALTOR® must engage in specific activity, beyond the scope of your real estate license, including “systematically contacting owners of residences in default to offer foreclosure consulting services.” §7-301(C)(2). “Foreclosure consulting services” include “arranging or facilitating the sale of a homeowner’s residence or the transfer of legal title, in any form, to another party as an alternative to foreclosure.” §7-301(E)(7). 

I would like to prepare a BPO for a bank. What do I need to know?

.  A Broker Price Opinion (BPO) is typically requested of a real estate licensee when a property has been foreclosed on, is about to be foreclosed, or has in some other way entered ownership inventory of a "third party" such as a lender, etc., and the new or prospective owner seeks a valuation. 

To quote Juliet Capulet, "What's in a name?  That which we call a rose, by any other name would smell as sweet."  Here, although you may believe you are being asked to produce a BPO, the information requested is clearly a Competitive Market Analysis (CMA).  Neither the Maryland Real Estate Brokers Act nor the Code of Maryland Regulations (COMAR) makes any reference to a BPO.  Under Maryland law if a licensee visits and photographs property, and compares it to other properties that have recently sold to recommend a marketing price, it is a CMA.  

In our opinion, these requests are for a CMA and are no different from any other request for a market analysis. Under COMAR, an appraiser’s license is not required for a real estate licensee to prepare a CMA.  As you are probably aware, a CMA must comply with Maryland law, which includes the disclosure provided below for all CMA’s:

“(1) A licensee may prepare a competitive market analysis of a specific property for a client, prospective client, or customer. The analysis shall include the following statement printed conspicuously and without change on the first page:

COMPETITIVE MARKET ANALYSIS DISCLOSURE
This analysis is not an appraisal. It is intended only for the purpose of assisting buyers or sellers or prospective buyers or sellers in deciding the listing, offering, or sale price of the real property.

(2) If a licensee includes a property in which the licensee has an interest as one of the comparables, that fact shall be disclosed to the client, prospective client, or customer.”

Such requests are no different from any other consumer's request for a market analysis.  It makes no difference if this is being done within or outside of the listing process.  The agent's analysis is identical, using the same tools and data that an agent would use for any CMA.  If a REALTOR® prepares a CMA for a seller or buyer, which sets forth the price range of the property, we highly recommend she keep in her files a copy of the CMA and documentation of the properties used in preparing it.  This is good business practice.

Finally, because the licensee is paid a fee for this service, under Maryland law, as with any other salesperson or associate broker compensation, the fee must be paid to the broker, rather than directly to the individual agent. 

In the Maryland Homeowners Association Act (HOA) (Title 11B, Section 106 (f)), it states that “the provisions of subsections (a), (b), (d), and (e) of this section do not apply to the sale of a lot in an action to foreclose a mortgage or deed of trust.”

The REO seller of bank-owned property is not exempt from complying with the HOA.  As you correctly noted, the HOA does provide an exemption for properties in an action to foreclose a mortgage or deed of trust but not for lender owned properties.  See §11B-106 of the Maryland Real Property Article for more information. 

Contrast the above with Section 10-702 of the Real Property Article of the Maryland Article which specifies the seller’s responsibility to provide a buyer with a Disclosure/Disclaimer Statement.  This provision specifically exempts sales by a lender or an affiliate or subsidiary of a lender that acquired the real property by foreclosure or deed in lieu of foreclosure from providing the buyer with a Disclosure/Disclaimer Statement. This language is broader, and exempts both the foreclosure sale on the courthouse steps (or Deed in Lieu) and the subsequent REO sale by the foreclosing lender or its affiliate/subsidiary. 

However, there are no exemptions from laws like the Homeowners Association Act, the Condominium Act or lead paint disclosure as well as disclosures required by local law for REO properties.  Nevertheless, some federally chartered institutions are declaring that they are exempt from all such disclosures.  As of the date of this response, there is no controlling legal authority for that assertion. 

It is also important to remember that under both the Homeowners Association Act and the Condominium Act, a buyer may rescind a contract if the buyer does not receive the required disclosures and documents within the specified time.  Under the law, the buyer waives the right to rescind if the buyer proceeds to settlement not having received the documents.  Under the circumstances you describe, the time to enforce the statute is before settlement.  The buyer has no remedy after settlement and should be advised to seek competent legal advice before proceeding.

We apply a similar analysis to other disclosures, like state and federal lead paint, private water and sewer facilities charges, and various locally required disclosures.  Unless the seller can demonstrate, through production of controlling legal authority, that the seller is exempt from these requirements, the seller should comply.

I list REO properties.

First, I am aware that in many, if not most, of the bank owned properties listed for sale the purported seller/bank does not possess legal title to the property. When the lender/owner of REO property contacts a brokerage with a prospective listing, the listing agent should always request evidence that the seller is the actual owner of the property.  While this would be standard procedure if the seller were, for example, an individual selling an investment property owned by an LLC, it is more complicated in a foreclosure situation because there is no legal requirement in Maryland that the foreclosure attorney or the lender/owner of the REO property immediately or even promptly record the Trustees Deed.  In Maryland, information about the foreclosure purchaser is required to be recorded in a Foreclosure Registry.  As of the date of this response, REALTORS®, homeowners and condominium associations and the general public do NOT have access to the Foreclosure Registry, making it even more difficult to identify the actual owner of the property after a foreclosure.   If the foreclosure sale was held, but not yet ratified by the court, it is possible for the sale to be overturned, so putting that property on the market before ratification carries a risk.  If the sale is ratified, but no deed is recorded, the lender is at least owner of legal title, but not owner of record because the deed was not recorded.  The listing brokerage and agent should ask the REO Seller and/or asset manager for verification that the seller is in possession of the deed. Under long-established Maryland law, the purchaser at a foreclosure sale acquires both “equitable title” and “legal title” as of the foreclosure sale date because, while “legal title” does not pass until (i) the sale has been ratified and (ii) the deed conveyed, it is retroactive to the foreclosure sale date. 

So, that’s the legal background.  The practical explanation is that one cannot offer for sale what one does not own.  Additionally, no real estate licensee may place a misleading advertisement.  In my opinion, it is false and misleading to advertise for sale a property that the purported seller does not actually own, unless this fact is made perfectly clear to a buyer at the very beginning of the process.  Therefore, in the future, title to REO listings should either be in the bank when listed or a disclosure made in the listing that transfer of title is subject to ratification of the foreclosure sale and the seller obtaining the deed.