Top 10:

1. Misstatements of material fact is a current trend in licensing complaints. This is mostly based on a buyer’s disappointment with condition issues that they learn of after they move in. These claims are often raised against listing agents, not the buyer’s agent.

 

2. The MLS and GLAR forms protect agents from misstatements of fact by disclaimers on MLS data such as “Information is deemed to be reliable, but is not guaranteed,” in the MLS footer and clauses “Release” & “Property Condition.”

 

3. Seller is expected to convey accurate information about a property, not the agent.

 

4. Brokers are always implicated in complaints against their agents. (respondeat superior or vicarious liability principles) However, there is no express provision in the Michigan occupational code that makes a broker or brokerage entity vicariously liable for the conduct of its licenses.

 

5. Service Provision Agreements (a/k/a listing agreement, buyer’s agency agreement) must have the applicable substantive blanks filled in and must be signed by the client before that client transmits any confidential information to the licensee. (R 339.2305; “Rule 305”),

 

6. Remember: those agreements (buyer’s agency agreement, listing agreement) have provisions protecting you from liability. Use them to your advantage, and for the protection and certainty that they can provide to your clients.

 

7. The key Federal Real Estate Settlement Procedures Act (“RESPA”), provisions governing and preventing certain referral fees and kickbacks are in Section 8. 12 U.S.C. §2607

• 8(a) prohibits referral fees;

• 8(b) prohibits fee splitting where the fees are not earned;

• 8(c) provides exceptions to (a) and (b); and

• 8(d) covers enforcement and penalties.

 

In other terms, if someone refers settlement service business they cannot accept a fee for the referral. Correspondingly, if someone accepts a referral of settlement services they cannot pay a fee.

 

8. With respect to brokers and ownership in title companies, understanding the “affiliated business arrangement” provisions is critical.

 

9. A team can’t be separately licensed as an entity – otherwise it would just be an entity broker, and not a cooperating group of licensees employees by the same broker. (Michigan Occupational Code §2505(1)(b))

 

10. Salespeople cannot accept commission or other consideration from any person other than the real estate broker that employs the salesperson, provided the money was earned for performing a duty under the Code. Thus, the team cannot pay the salesperson. (Michigan Occupational Code §2510(1))

 

May 2023 Greater Lansing Association of REALTORS® Industry Update on May 18, 2023.

Thank you to presenters:

-Jared Roberts, GLAR Legal Counsel, Fraser Trebilcock Lawyers
-Jeff Bone: 2023 President, Greater Lansing Association of REALTORS®