LEGAL HOTLINE ARCHIVE
Agents

Q. 1) What is the role of a broker who employs two associates one of which represents a seller and the other of which represents a buyer in the same transaction? 2) What are the responsibilities of an agent who substitutes in for another agent? 3) If a broker sends an agent to conduct an open house who does that agent represent?

A. 1. Louisiana agency law defines licensee to include any person who has been issued a license by the commission as a real estate sales person, as well as a broker. See LSA-R.S. 9:3891(11). Thus, a broker owes the same duties that their agents would to all clients of any of their agents. Dual agency exists where a licensee is working with both a buyer and a seller in the same transaction. If a broker has an agent working with the buyer, as well as an agent working with the seller in the same transaction, that broker is in fact representing both the buyer and seller. Proper dual agency disclosure should be made to the clients of both agents.

2. Many brokerage agreements address the permissibility, as well as applicable rules and consequences of one agent substituting for another. The written Agreement between agents and clients also sometimes address this situation. In those cases the brokerage and client agreements control. Louisiana law regarding mandate may also be applicable. A mandate is a contract whereby a person (the principal) confers authority on another person (the mandatory) to transact one or more affairs for the principal. Louisiana Civil Code Article 2989. Contracts for mandate are not required to be in any particular form. Louisiana Civil Code Article 2993. A mandatory is bound to fulfill the mandate he accepts with prudence and diligence. Louisiana Civil Code Article 3001.

3. The open house is being conducted on behalf of a client of the broker for which the agent works therefore the agent represents that client. If at the open house the broker shows the house to someone who is interested in purchasing the house and is also interested in having that agent represent them in such purchase, then there would be a case of dual agency and proper disclosure should be made to the purchaser as well as the owner of the house.

Q. The designated listing agent is also the wife of the developer. Therefore the listing agent has a direct monetary interest in the listed house. When working with buyers:

1. Can agent be a dual agent since the agent has interest in the property?
2. What type of agency disclosure is needed?
3. Is a special form needed to indicate sub-agency?

A. Article V of the Code of Ethics and Standards of Practice of the National Association of Realtors provides:

Realtors shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.

In addition, the Section 3501 of the Rules and Regulations of the Louisiana Real Estate Commission provide that:

A licensee acting as a principal in a real estate transaction, whether individually or through an entity in which he or she has an interest, shall disclose his or her status as a licensed real estate agent to all other principals in the real estate transaction, in writing, prior to entering into any real estate contract.

Thus, under both the national code and rules the listing agent is required to disclose to affected parties that she had an interest in the property through her husband. However, the listing agent will not necessarily be considered a dual agent. Louisiana Revised Statute Section 9:3897(G) provides:

A licensee shall not be considered as acting as a dual agent if the licensee is working with both buyer and seller, if the licensee is the seller of property he owns, or if the property is owned by a real estate business of which the licensee is the sole proprietor and agent.

If the listing broker does not fit within the aforementioned exception then normal dual agency disclosure will be required.

With respect to subagency, Louisiana Revised Statute Section 9:3898 provides:

Subagency can only be created by written agreement. A licensee is not considered to be a subagent of a client or another broker solely by reason of membership or other affiliation by the broker in a multiple listing service or other similar information source. Thus, while no special form is needed for subagency, there must be some formal written document creating the subagency.

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