Transaction Brokerage & Conflict Resolution

Flashcards about Transaction Brokerage Agreements and Conflict Resolution

Transaction Brokerage Agreement

To resolve conflicts when the same brokerage or designated agent represents clients with opposing interests in the same transaction.

Full and Timely Disclosure

The nature of the conflict, its advantages/disadvantages, and disclosure must be made as soon as the conflict arises

Informed Consent

Clients must understand the facts and implications of giving consent, and consent must be given after disclosure-not before the conflict arises.

Written Acknowledgement for Transaction Brokerage

A signed agreement showing the client consents to transaction brokerage. It amends the original agreement with terms for facilitation services.

Transaction Facilitator

A real estate licensee who helps both clients reach a deal impartially, without advocating for either side.

Agency Responsibilities in Transaction Brokerage

They are modified or removed (abrogated) because full agency duties cannot be fulfilled when interests conflict.

Duties of a Transaction Facilitator

Keep info confidential, share new info fairly, follow lawful instructions, and avoid new conflicts of interest.

Services Provided by a Transaction Facilitator

Forms, offers, real estate info, service provider lists, updates on transaction progress, and assistance reaching agreement.

Broker/Licensee Responsibilities During Transaction Brokerage

Impartiality, consistency in information, honesty, care, and that confidential advice isn't shared across clients.

Prohibitions for Transaction Facilitators

Providing confidential advice, advocating for either client, using discretion that benefits one side, or disclosing client info to the other side.

General Services Facilitators Provide

General info, brokerage info, property info, and asking probing questions without giving advice.

Step 1 in Resolving Conflict of Interest

Educate clients early about the possibility of transaction brokerage.

Step 2 in Resolving Conflict of Interest

Recognize conflicts of interest that transaction brokerage can resolve.

Step 3 in Resolving Conflict of Interest

Disclose the conflict fully and in a timely manner to both clients.

Step 4 in Resolving Conflict of Interest

Seek the clients' direction on how they want to resolve the conflict.

Step 5 in Resolving Conflict of Interest

Obtain each client's informed consent and have them sign the transaction brokerage agreement.

Step 6 in Resolving Conflict of Interest

Act as a transaction facilitator with impartiality, only providing permitted services.

Step 7 in Resolving Conflict of Interest

Proceed with the transaction by helping both clients reach a mutually acceptable agreement.

When is Transaction Brokerage NOT Appropriate?

When the client cannot advocate for themselves, or when the agent/brokerage cannot be neutral (e.g., personal interest or relationship with a client).

Burden of Proof for Transaction Brokerage Appropriateness

The brokerage or designated agent must prove it was appropriate and that both clients were capable of proceeding.

Client Factors Making Transaction Brokerage Inappropriate

Advanced age, physical/mental difficulties, limited English proficiency, or lack of real estate understanding.

Brokerage Conflicts Preventing Transaction Brokerage

Personal trades or business/familial relationships that affect the brokerage or agent's neutrality.

What Happens if Transaction Brokerage is Declined?

If one or both clients do not agree, other options must be chosen to resolve the conflict of interest.

Brokerages Under Common Law When Transaction Brokerage is Declined

They must determine which client established the representation relationship first.

Designated Agents When Transaction Brokerage is Declined

Determine which client was represented first using written service agreements. That client stays, and the other must choose a new option.