Sign California Arbitration Agreement Easy

Document type sign arbitration agreement california easy

[Music] [Applause] welcome to another edition of John's rants hopefully you've been enjoying these presentations today's topic is going to be buyer broker representation agreements in litigation particularly litigation after the close of escrow most of that litigation will be filed by a buyer buyers that believe they didn't get the services that they were promised buyer didn't the buyer didn't get the house that they thought they were getting and of course as the buyer's representative the burden will fall on the broker in the agent to establish that the fiduciary obligations that you had were taken care of part of the problem with that is that oftentimes a real estate company will represent a buyer but without any written agreements therefore it's going to be up to the buyer's agent to establish what they thought they were supposed to do what the buyer thought they were supposed to do and I believe that's a mistake see AR has a couple of forms that I think Realtors should use on a more regular basis that's been my experience as a defense attorney that Realtors don't often use the buyer representation forms and I'm hoping to make a case today why I believe that's a mistake first of all these are agreements that are between the buyer and the buyer's broker and the purpose is to cover the representation and to establish not only the Commission issues but also to establish what the representation will and will not entail the key features are that it lays out the tasks and the obligations that a realtor has that would be paragraph 5 of the agreement but in paragraph 6 it makes it very clear that there are going to be things that you're not going to do sometimes a buyer thinks you're going to go check permits or that you're going to measure the property for square footage or do all sorts of other things that in reality you're neither capable of doing or unqualified to do or that specifically a statute says you shouldn't do so this defines the scope of the duties that you're going to be performing it provides a written consent in the event that down the road the representation becomes a dual agency representation and it also provides for under certain circumstances revocation of the agreement between the buyer and the agent there's three types of forms so there's not just one form for all purposes one is what I would call the flipside of the listing agreement that's the exclusive form then there's a form that while it's not exclusive says that if you do represent the buyer you're going to be promised a certain amount of commission regardless of what Commission is being paid by the listing agent and then lastly there's absolutely no money there's absolutely nothing to tie you to the client but if you do represent that client in a purchase of a property it simply defines the do's and the don'ts of what you're going to do so the buyer representation form that is not exclusive is revocable and it's not exclusive they can use whoever they want the non-exclusive representation that does provide for some Commission by the way the one that has absolutely no strings attached that is the BR and and then there's the BR in E form that's the buyer representation agreement that is non-exclusive it provides how you're going to be compensated for certain services and it provides that if you're paid they'll deduct the amount that the seller and the sellers agent pays and it makes it non revocable but it does provide that you're going to be guaranteed a certain amount of money it has a definite commencement date a definite termination date there are mediation clauses there's an optional arbitration clause and there is an attorney's fees provision then there's the BR eak which is in my view as I said the flip side to the listing agreement it provides specifically for compensation it is non revocable it provides that you will be the exclusive buyer's agent for that buyer and that regardless of whether they buy the property from your office or somewhere else they will be obligated to pay you a commission definite commencement date and a definite termination date there is a safe harbor provision in it and there's mediation and arbitration clauses and attorneys fees provisions so why use these forms well a couple of things number one it puts the duties and the obligations that you are going to provide them in writing you already know that you have many statutory obligations you have many responsibilities that the courts have imposed on you but there are some things that people think you have an obligation to do that you don't some of those things are listed in paragraph eight eighteen of them are PA contract and there's a scope that you're limited you don't for example decide the highest and best use for the property you don't decide how much to pay you don't go off-site you don't check permits you don't check public records so this says all that so it puts your duties and obligations in writing it also informs the buyer of your responsibilities at an early stage so that it sets their expectations it makes it clear what you're qualified to do and what you're not qualified to do it identifies the services that you're going to provide and what you're not going to provide and what others will provide it allows for negotiations relative to the terms of the relationship it does provide consent for dual agency if that's going to happen and it brings clarity and certainty to the relationship at some juncture of if there's a dispute over who the procuring causes for that particular buyer it could even be used in a hearing to establish pre hearing cause so for all of those reasons I believe that it's a very tool there was a case that was decided back in 1998 called fields versus century 21 cloud and in that case did a couple of things well first of all it talked about the difference between representing a customer versus representing a client if you're the listing agent for example the statute of limitations against you is two years if it's if an action is brought by the buyer that your firm did not represent but in a fiduciary duty situation the fields case said that the statute of limitations is three years but then the court went on to say that there's another issue that's very important which is if you are representing a buyer you're required under the fields case to literally step into the shoes of the buyer anticipate the information that the buyers should know and then provide it later on the jury instructions were amended and it now specifically says that in fact what it says in that jury instruction is the broker must place himself or herself in the position of the client and consider the type of information required for the client to make a will informed decision it's a very difficult standard sets up some unreasonable expectations and sometimes frankly the information you're simply not qualified to give so what it does in this scenario is it clarifies what you will and what you won't do now it's not required by lied there's no statute that says that you have to have a buyer representation form as you know there is a requirement that you have a written agreement for a commission from a seller and of course the sellers agent will then pay that commission in a shared way to a curing cause agent however there is no requirement but again in any professional relationship whether it be with a lawyer whether it be with a realtor or whoever it's a good idea to have a written document that specifies specifically what you are going to do some offices actually they're agents to use this a form and I think that's actually a good idea the courts have upheld these by our representation agreements as being legally enforceable so in in in closing I think it's best to have a buyer sign these agreements frankly at the earliest stage you you can provide it with the agency disclosure before you prepare an offer you can give it to them at whatever stage you deem appropriate and of course which one you give them depends upon whatever your office's policies are whether it's going to be exclusive non-exclusive for compensation or not so that you can use the correct form you can use it with the consent for representation of more than one agent excuse me more than one a buyer or more than one seller again and looking at it from a perspective of the Code of Ethics article 9 of the code of ethics specifies I'm going to read this to you Realtors for the protection of all parties shell is sure whenever possible that all agreements related to real estate transactions including but not limited to listing and representation agreements etc be in writing now n AR does not require that the California associations enforce the representation agreements in writing because frankly it's been historical that in California we don't use representation agreements and I think that's a mistake I think that wherever possible for not only the protection of the client but for the protection of the brokerage that you should consider using these forms because again why do we put agreements in writing so that there's no misunderstanding about what the deal is amongst oldest parties standard of practice nine point one says Realtors shall use reasonable care to ensure that documents pertaining to the purchase sale or lease be in writing and that nine point two talks about making sure that listing and representation agreements be in writing even if those documents are passed electronically so how do you broach this with your client I just taught a risk management class here well while I was up here today and we were talking about how do you present certain kinds of things to your client sometimes you do it in a way that makes it look like all you care about is your own self-interest but the reality is that putting these agreements in writing protects the client every bit as much as it protects the real estate professional because again the client can see what it is that realtor is going to do for them and I think when you talk to the client you need to make them understand that it clarifies and puts in writing all of the different variations of things that you can and cannot do and it reminds them that it will protect their interests as well as your own so for all of those reasons I think that the use of these buyer representation agreements is a good idea I think it's something that's underutilized when you don't have it in writing now it's up to you to establish the parameters and it makes it more difficult down the line if there's a mediation or an arbitration or even a litigation so again I'm urging you get rid of people like me use these buyer representation agreements I think you're going to find them very beneficial and I strongly suggest that your office consider using them thank you very much and we'll see you next month probably going to talk about the contingency removal issues next month we might even start talking or starting a little conversation about referral fees so until then we'll see you again