"What we have heah, Boy, is a failure to kommunikate!"
A reader’s question about breaking buyers’ representative agreements has stirred my ire (admittedly, a task that is too easy). I’ve discussed this topic before, but as a brief refresher, know this:
Until – what, ten years ago? – the law of agency governed real estate agents. We were all considered to be agents of our principal and as such owed our complete loyalty to the house seller, since he was paying us.
Now that body of law, going 500 years back to English common law, makes perfect sense in most cases of agency; if, in 1670, an agent of Dutch ship owners was dispatched to Africa to buy slaves for the owners and ship them on for sale in the sugar plantations of the Caribbean, he was expected to represent only his principal – he was not expected, or allowed, to side with the slaves, their Moslem owners or indeed, anyone else. If he betrayed his principal he was liable for the economic harm that resulted.
But four hundred years on, real estate agents began to fall from this perfect sphere. One half of every house sale involved an agent who, usually, had never met the seller and who often had spent months or even years with the buyers finding the proper house. It was absurd to think that the buyer’s agent owed his complete loyalty to the seller and owed nothing to his buyer, yet that’s what the law demanded. And indeed, in my years as a real estate lawyer, I reminded buyers’ agents of exactly that. Any agents out there who remember me from the 80’s, I apologize, but I was representing sellers and I did know the law.
So anyway: the law of agency was changed awhile ago, and the idea of a buyer’s agent was for the first time recognized by our Connecticut legislature. Now, so long as we have a signed agency agreement, we can represent the buyer in a real estate transaction and give him our complete loyalty despite the fact that it is the home owner on the other side of the deal who will be paying a commission and thus, our fee. Pretty cool, eh?
But, under the terms of this legislative exemption from the standard law of agency, there must be a signed agreement between the buyer and her agent. A signed agreement saying what?
My professional organization, the Connecticut Association of Realtors (CAR), saw an opportunity here and quickly drew up a model agreement that deliberately left openings for their members to lock unsuspecting buyers into long term bondage, where they can only buy houses through the agent who first signed them up. And since the law, as drafted, demands that this agreement be signed at the first face-to-face meeting between potential buyer and agent, the worst agents responded by filling in contract durations of six or even 12 months and encompassing all of Fairfield County.
It’s totally nuts – a law that was intended to help home buyers was corrupted, instantly, into a rip-off scheme where buyers are trapped into a relationship with the very worst of real estate agents: those who, so insecure about their ability to provide a valuable service, trick them into involuntary servitude.
Etcetera and enough. The CAR has corrupted this whole idea and its legal counsel has refused to even consider my own draft of a buyer’s rep agreement that would leave the buyer free to move on after a day of house touring. Which is understandable – CAR’s lawyer, Eugene Marconi, is an agent of his principal and owes his complete loyalty to the brokers who pay his salary.
More disappointing is the state Department of Consumer Protection, which spends its time scurrying around inspecting brokerage firms’ records to ensure that there are indeed signed buyer rep agreements in their files, without ever even considering whether those agreements are fair to consumers. It’s off their radar.
Okay, so how do you break one of these lengthy agreements that you so naively entered into? If you already have a lawyer involved in your home search, call her – she’ll raise Holy Hell with the brokerage firm involved, and that should do it. But otherwise, as I advised my (other) reader, send me the names and particulars and I’ll post them here on a wall of shame. I’m certainly ashamed of how the worst of my colleagues have abused this law, and I’d be delighted to spread that shame to the perpetrators.