HB-4417, As Passed House, February 26, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 4417

      A bill to amend 1980 PA 299, entitled

"Occupational code,"

by amending section 2517 (MCL 339.2517), as amended by 2000 PA

436.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1        Sec. 2517. (1) A licensee shall disclose to a potential

 2  buyer or seller in a real estate transaction all types of agency

 3  relationships available and the licensee's duties that each

 4  agency relationship creates before the disclosure by the

 5  potential buyer or seller to the licensee of any confidential

 6  information specific to that potential buyer or seller.

 7        (2) Unless knowingly waived by execution of a limited

 1  service agreement, a real estate broker or real estate

 2  salesperson providing services under any service provision

 3  agreement shall, at a minimum, provide to the client the duties

 4  described in section 2512d(2) and the services described in

 5  section 2512d(3).

 6  (3) (2) The disclosure of the type of agency relationship

 7  shall be in writing, shall be provided to the client, and shall

 8  substantially conform to the following:

9        DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIPS

10        Before you disclose confidential information to a real

11  estate licensee regarding a real estate transaction, you should

12  understand what type of agency relationship you have with that

13  licensee. A real estate transaction is a transaction involving

14  the sale or lease of any legal or equitable interest in real

15  estate consisting of not less than 1 or not more than 4

16  residential dwelling units or consisting of a building site for a

17  residential unit on either a lot as defined in section 102 of the

18  land division act, 1967 PA 288, MCL 560.102, or a condominium

19  unit as defined in section 4 of the condominium act, 1978 PA 59,

20  MCL 559.104.

21        (1) An agent providing services under any service provision

22  agreement owes, at a minimum, the following duties to the client:

23        (a) The exercise of reasonable care and skill in

24  representing the client and carrying out the responsibilities of

25  the agency relationship.

26        (b) The performance of the terms of the service provision

 1  agreement.

 2        (c) Loyalty to the interest of the client.

 3        (d) Compliance with the laws, rules, and regulations of this

 4  state and any applicable federal statutes or regulations.

 5        (e) Referral of the client to other licensed professionals

 6  for expert advice related to material matters that are not within

 7  the expertise of the licensed agent.

 8        (f) An accounting in a timely manner of all money and

 9  property received by the agent in which the client has or may

10  have an interest.

11        (g) Confidentiality of all information obtained within the

12  course of the agency relationship, unless disclosed with the

13  client's permission or as provided by law, including the duty not

14  to disclose confidential information to any licensee who is not

15  an agent of the client.

16        (2) A real estate broker or real estate salesperson acting

17  pursuant to a service provision agreement shall provide the

18  following services to his or her client:

19        (a) When the real estate broker or real estate salesperson

20  is representing a seller or lessor, the marketing of the client's

21  property in the manner agreed upon in the service provision

22  agreement.

23        (b) Acceptance of delivery and presentation of offers and

24  counteroffers to buy, sell, or lease the client's property or the

25  property the client seeks to purchase or lease.

26        (c) Assistance in developing, communicating, negotiating,

27  and presenting offers, counteroffers, and related documents or

House Bill No. 4417 (H-2) as amended February 26, 2008

 1  notices until a purchase or lease agreement is executed by all

 2  parties and all contingencies are satisfied or waived.

 3        (d) After execution of a purchase agreement by all parties,

 4  assistance as necessary to complete the transaction under the

 5  terms specified in the purchase agreement.

 6        (e) [FOR A BROKER OR ASSOCIATE BROKER WHO IS INVOLVED AT THE

 7  CLOSING OF A REAL ESTATE OR BUSINESS OPPORTUNITY TRANSACTION FURNISHING,

 8  OR CAUSING TO BE FURNISHED, TO THE BUYER AND SELLER, A COMPLETE AND

 9  DETAILED CLOSING STATEMENT SIGNED BY THE BROKER OR ASSOCIATED BROKER  

    SHOWING EACH PARTY ALL RECEIPTS AND DISBURSEMENTS AFFECTING THAT PARTY.]

10        Michigan law requires real estate licensees who are acting

11  as agents of sellers or buyers of real property to advise the

12  potential sellers or buyers with whom they work of the nature of

13  their agency relationship.

14                          Seller's Agents

15        A seller's agent, under a listing agreement with the seller,

16  acts solely on behalf of the seller. A seller can authorize a

17  seller's agent to work with subagents, buyer's agents and/or

18  transaction coordinators. A subagent is one who has agreed to

19  work with the listing agent, and who, like the listing agent,

20  acts solely on behalf of the seller. Seller's agents and

21  subagents will disclose to the seller known information about the

22  buyer which may be used to the benefit of the seller. Individual

23  services may be waived by the seller through execution of a

24  limited service agreement. Only those services set forth in

25  paragraph (2)(b), (c), and (d) above may be waived by the

 1  execution of a limited service agreement.

2                           Buyer's Agents

 3        A buyer's agent, under a buyer's agency agreement with the

 4  buyer, acts solely on behalf of the buyer. Buyer's agents and

 5  subagents will disclose to the buyer known information about the

 6  seller which may be used to benefit the buyer. Individual

 7  services may be waived by the buyer through execution of a

 8  limited service agreement. Only those services set forth in

 9  paragraph (2)(b), (c), or (d) above may be waived by execution of

10  a limited service agreement.

11                           Dual Agents

12        A real estate licensee can be the agent of both the seller

13  and the buyer in a transaction, but only with the knowledge and

14  informed consent, in writing, of both the seller and the buyer.

15        In such a dual agency situation, the licensee will not be

16  able to disclose all known information to either the seller or

17  the buyer.

18        The obligations of a dual agent are subject to any specific

19  provisions set forth in any agreement between the dual agent, the

20  seller, and the buyer.

21                  Licensee Disclosure (check one)

22        I hereby disclose that the agency status of the licensee

23  named below is:

1        _____  Seller's Agent

2        _____  Seller's Agent – limited service agreement

3        _____  Buyer's Agent

4        _____  Buyer's Agent – limited service agreement

5        _____  Dual Agent

6        _____  None of the above

7             Affiliated Licensee Disclosure (check one)

 8        _____Only the licensee's broker and a named supervisory

 9  broker have the same agency relationship as the licensee named

10  below. If the other party in a transaction is represented by an

11  affiliated licensee, then the licensee's broker and all named

12  supervisory brokers shall be considered disclosed consensual dual

13  agents.

14        _____All affiliated licensees have the same agency

15  relationship as the licensee named below.

16        Further, this form was provided to the buyer or seller

17  before disclosure of any confidential information.

18      ______________________      _____________________

19      Licensee                    Date

20      ______________________      _____________________

21      Licensee                    Date

22                           Acknowledgment

23        By signing below, the parties confirm acknowledge that they

24  have received and read the information in this agency disclosure

25  statement and acknowledge that this form was provided to them

26  before the disclosure of any confidential information. specific

 1  to the potential sellers or buyers.

2_      __________________________________        _________________

3       Potential Buyer/Seller (circle one)        Date

4_      ___________________________________        _________________

5       Potential Buyer/Seller (circle one)        Date

 6        (4) On a separate form, the following information in the

 7  following format shall be provided to a client desiring to waive

 8  any of the services required under section 2512d(3)(b), (c), and

 9  (d) by execution of a limited service agreement:

10                   LIMITED SERVICE AGREEMENT

11      Pursuant to Michigan law certain services provided by

12      a real estate license MAY be waived.

13      A real estate licensee is required to perform certain

14      services for his or her client unless these services are

15      waived by the client. By signing below, you agree that

16      the real estate licensee will not be required to perform

17      the services initialed (only initial the services waived).

18                                             Initial if waived:

19      --Acceptance of delivery and presenta-

20         tion of offers and counteroffers

21         to buy, sell, or lease your

22         property or the property you

23         seek to purchase or lease.            ______    ______

24      --Assistance in developing, communica-

25         ting, negotiating, and presenting

26         offers, counteroffers, and related

27         documents or notices until a purchase

28         or lease agreement is executed by all

1          parties and all contingencies are

2          satisfied or waived.                   ______    ______

3       --After execution of a purchase

4          agreement by all parties,

5          assistance as necessary to complete

6          the transaction under the terms

7          specified in the purchase agreement.   ______    ______

8                           Agreement to Waive

9       By signing below, I acknowledge that the duties owed to

10      me pursuant to Michigan law have been explained to me and

11      that I knowingly agree that the real estate licensee

12      who represents me will not provide the services that are

13      initialed above. I also understand that in any proposed 

14      real estate transaction, no other real estate licensee

15      is required to provide the waived services unless I

16      subsequently hire them to do so. I also acknowledge

17      that in order to protect my interests I may need to

18      retain other professionals, such as an attorney.

19      _________________________________       ____________________

20      Seller or Buyer                                         Date

21      _________________________________       ____________________

22      Seller or Buyer                                         Date

23      _________________________________       ____________________

24      Real Estate Broker or Salesperson                       Date

25      _________________________________

26      Brokerage Name

27  (5) (3) This article does not prevent a licensee from acting

28  as a transaction coordinator upon proper notice to all parties to

29  a real estate transaction.

30  (6) (4) A broker and a client may enter into a designated

31  agency agreement. In the absence of a written designated agency

 1  agreement, a client is considered to have an agency relationship

 2  with the broker and all affiliated licensees.

 3  (7) (5) A designated agency agreement shall contain the name

 4  of all associate brokers who are authorized to act as supervisory

 5  brokers. If designated agents who are affiliated licensees

 6  represent different parties in the same real estate transaction,

 7  the broker and all supervisory brokers are considered disclosed

 8  consensual dual agents for that real estate transaction.

 9  Designated agents who are affiliated licensees representing

10  different parties in the same transaction shall notify their

11  clients that their broker represents both buyer and seller before

12  an offer to purchase is made or presented.

13  (8) (6) Except as otherwise provided in subsection (5) (7),

14  a client with a designated agency agreement is not considered to

15  have an agency relationship with any affiliated licensees of the

16  designated agent. Two designated agents who are affiliated

17  licensees may each represent a different party in the same

18  transaction and shall not be considered dual agents. The

19  designated agent's knowledge of confidential information of a

20  client is not imputed to any affiliated licensee not having an

21  agency relationship with that client.

22  (9) (7) A designated agent shall not disclose confidential

23  information of a client to any licensee, whether or not an

24  affiliated licensee, except that a designated agent may disclose

25  to any supervisory broker confidential information of a client

26  for purposes of seeking advice or assistance for the benefit of

27  the client. A licensee who represents a client in an agency

 1  capacity does not breach any duty or obligation owed to that

 2  client by failing to disclose to that client information obtained

 3  through a present or prior agency relationship.

 4  (10) (8) A listing agreement or a buyer's agency agreement

 5  may be amended to establish a designated agency relationship, to

 6  change a designated agent, or to change supervisory brokers at

 7  any time pursuant to a written addendum signed by the parties.

 8  (11) (9) As used in this section:

 9        (a) "Affiliated licensees" means individuals licensed as

10  salespersons or associate brokers who are employed by the same

11  broker.

12        (b) "Buyer" means a purchaser, tenant, or lessee of any

13  legal or equitable interest in real estate.

14        (c) "Buyer's agent" means a licensee acting on behalf of the

15  buyer in a real estate transaction who undertakes to accept the

16  responsibility of serving the buyer consistent with those

17  fiduciary duties existing under common law.

18        (d) "Designated agent" means an individual salesperson or an

19  associate broker who is designated by the broker as the client's

20  legal agent pursuant to a designated agency agreement.

21        (e) "Designated agency agreement" means a written agreement

22  between a broker and a client in which an individual salesperson

23  or associate broker affiliated with that broker is named as that

24  client's designated agent.

25        (f) "Dual agent" means a licensee who is acting as the agent

26  of both the buyer and the seller and provides services to

27  complete a real estate transaction without the full range of

 1  fiduciary duties owed by a buyer's agent and a seller's agent.

 2        (g) "Real estate transaction" means the sale or lease of any

 3  legal or equitable interest in real estate where the interest in

 4  real estate consists of not less than 1 or not more than 4

 5  residential dwelling units or consists of a building site for a

 6  residential unit on either a lot as defined in section 102 of the

 7  land division act, 1967 PA 288, MCL 560.102, or a condominium

 8  unit as defined in section 4 of the condominium act, 1978 PA 59,

 9  MCL 559.104.

10        (h) "Seller" means the equitable or legal owner of real

11  estate.

12        (i) "Seller's agent" means a licensee acting on behalf of

13  the seller in a real estate transaction who undertakes to accept

14  the responsibility of serving the seller consistent with those

15  fiduciary duties existing under common law.

16        (j) "Supervisory broker" means an associate broker

17  designated in a written agency agreement to act in a supervisory

18  role in an agency relationship.

19        (k) "Transaction coordinator" means a licensee who is not

20  acting as the agent of either the buyer or the seller.

21        Enacting section 1. This amendatory act does not take effect

22  unless House Bill No. 4416 of the 94th Legislature is enacted

23  into law.

24        Enacting section 2. This amendatory act takes effect July 1,

25  2008.