Question

Answer discussion questions regarding Chapter 6 and 4.

Roger is a broker who listed a home for sale owned by Kim and Mike. After a sales contract is executed Kim and Mike learn of property listed by Roger which they want to buy. Roger believes an intermediary agreement would be the best way to proceed in this situation.

1. What disclosures and to whom must Roger make before undertaking intermediary brokerage? Explain the importance of any disclosures being in writing.

     2. Roger knows the minimum amount that the seller of the property Kim and Mike want to buy will accept. Under what circumstances if any may Roger provide that indformation to Kim and Mike?

     3. What should Roger do regarding disclosures of known defects of title or the property?

     4. Roger is considering appointing licensees to assist the parties to the intermediary represention. What advantages will the buyers receive if he does so? What advantages will the seller receive?   

 

Answer 1

A broker is responsible for all brokerage activities including thse activities carried out by a sales agent sponsored by the broker.

A broker's duties required by law:

• Take utmost responsibility in putting the client as foremost even above one's own
• Inform all relevant information about the property or the transaction recieved by the broker to the client
• Be available to answer all the questions the client would have and present any offer to or counter off from the client
• Treat all stakeholders of the transaction fairly and honestly

Look at the question given:

1. Disclosures that Roger needs to make before undertaking the transaction would be to the parties as listed and the disclosure to each would be;

• Kim and Mike- All relevant information about the property being considered, contract agreement regarding timeline and brokerage involved (this should be in writing), make sure that there is a clause stating that this is a separate transaction from the previous one, the need for a sales agent,etc
• Seller: communicate an interest of the buyers,state the need for an intermediary in this case of how this might affect brokerage costs, etc

Intermediary would be the sales agent who will come into the picture after Roger gets the green signal from both parties. Disclosures should be drawn in the form of a contract and should be signed so that if there is a dispute in the future, Roger needs to have sufficient documentation to support for all his actions.

2. If Roger has already appointed an intermediary then he does not have any legal grounds to come into the picture as the resposnibility of revealing any information is now in the hands of the intermediary. Also if there is an agreement between the intermediary and the seller stating that unless told there should be no information transaction about the lowest price that would be settled.

3. The intermediary and Roger have to inform the buyer about any defects in title at the first instance itself as this can be grounds for suing and the client is actually entitled to full disclosure.

4. A better bargaining ground for both parties. Also all paperwork would be srutinized multiple times and so margin for error is low. The seller would bear all costs, therefore the buyer is at higher advantage.