The Difference Between Exclusivity and Agency
As buyers are signing significantly more agreements, here’s a refresher on the difference between exclusivity and agency.
ORLANDO, Fla. — Now that we’re in a post-NAR settlement landscape, if a Realtor® or MLS participant is working with a buyer, they will need a written agreement prior to touring a home. Florida Realtors® has created and updated buyer agreements options in recent months. Two important features of any agreement are whether it’s exclusive or not, and what type of agency or non-agency relationship the parties have.
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Exclusivity deals with whether a buyer has agreed to be represented exclusively by one brokerage firm or whether the buyer is free to “play the field” by working with multiple firms. The Exclusive Buyer Broker Agreement (EBBA) is the exclusive agreement between a buyer and brokerage firm, while the Showing Agreement and Property Pre-touring Agreement are non-exclusive.
In an EBBA, the buyer is contractually bound to work only with one real estate brokerage company until the term of the EBBA expires or the agreement is terminated. After this exclusive relationship is established, the rules described in Article 16 of the Realtor® Code of Ethics and Standards of Practice come into play. In particular, Standard of Practice 16-5 provides that “Realtors shall not solicit buyer/tenant agreements from buyers/tenants who are subject to exclusive buyer/tenant agreements.” There are quite a few additional rules surrounding Article 16, so if you have never reviewed all of the Standards of Practice under that article, they’re worth a read.
The Showing Agreement (SA) and Property Pre-touring Agreement (PPTA), however, are not exclusive. Buyers could talk with licensees from various brokerage firms and could even possibly enter into separate agreements with those firms. For example, a buyer could have a SA for one property with a brokerage firm and a second SA for a different property with a second brokerage firm. Of course, a buyer should use extreme care to make sure they understand and comply with the terms of all agreements and would be well-advised to take any questions about juggling multiple agreements to their own attorney.
Agency law is a separate issue that establishes the minimum legal duties a real estate brokerage company must provide to a client or customer. The EBBA anticipates this decision, and Section 12 establishes the relationship and includes any disclosure language required to form the relationship. In Florida, a real estate brokerage company has four types of agency relationships to choose from: no brokerage relationship, transaction broker, single agent and single agent with consent to transition to transaction broker. As such, there are four EBBA forms to choose from, with the only difference being the type of relationship established in Section 12 of each form.
While the EBBA establishes the agency relationship inside the agreement, the SA and PPTA do not. Transaction broker is the default relationship in Florida, so if no additional disclosure is given, that’s the relationship buyers will have with the brokerage firm by just signing an SA or PPTA. However, if the buyer and brokerage firm want to enter one of the other three relationships, the brokerage firm can provide the written disclosure in writing before or at the time of entering into an agreement for representation or before the showing of the property, whichever occurs first. These standalone disclosure forms are also available in the Florida Realtors forms library.
Joel Maxson is Associate General Counsel
Note: Information deemed accurate on date of publication
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