BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
When to Use the SNA and BNA forms
CAR has two excellent forms for you to use when you want to make clear that you represent only one party in a transaction, and clearly are NOT representing the other party.
These two forms are the “Seller Non-Agency Agreement” form and the “Buyer Non-Agency Agreement” form.
See: Forms SNA and BNA on ZipForms
When to use these forms:
1. FSBO’s: You are representing a buyer who is interested in a FSBO. At the time you are getting a Single Party Compensation Agreement (Form SP on ZipForms) signed, also have the seller sign the SNA form while reminding the seller that you represent the buyer only, even if the seller is paying your commission. Later, when the seller wants you to provide forms, because he/she doesn’t have them, you should forward the forms with a cover letter stating that you are forwarding the requested forms for the benefit of your client and the transaction and that you are not representing seller.
2. Buyer Representing Self: If you are a listing agent and a buyer wishes to represent himself/herself in the transaction, you would use the BNA form and, if buyer is in need of forms, use the same procedure as above with a cover letter reminding buyer that you do not represent him/her.
See Weekly Practice Tip: “Buyer Representing Self”
3. Limited Service Listing or Buyer Agents: If you encounter a listing agent who does no negotiating for the seller and tells you, the buyer’s agent, to contact the seller directly, again use the SNA form and a cover letter if requested for any forms.
Likewise, if you represent a seller and the buyer is represented by a “limited service” agent who is providing minimal, or no, services to the buyer (and likely rebating a portion of their commission to their buyer which is legal in California), then follow the same procedure as above where a buyer is representing herself/himself in the transaction, with buyer signing a BNA and you utilizing a cover letter with any forms transaction.
PRACTICE TIPS:
1. When representing one party in a transaction where the other party is not represented, or has minimal representation, NEVER cross over the line by giving advice to the other party, even if you have used one of these forms. This can create an undisclosed dual agency, with severe consequences.
2. If the unrepresented, or minimally represented, party wants forms, do NOT just give a list or packet of the usual forms which would be needed by that party in that type of transaction. Just doing that could be construed as giving advice to the other side as to which forms are needed and, presumably, which are not needed. Require that they ask for particular forms.
3. In your cover letter when you are providing forms for the other side, use a paragraph such as:
“You have told me that you do not have a _______________ form. I am enclosing that form for your use. I am providing this form to you for the benefit of my (Seller/Buyer) so that the transaction to proceed. Please remember that I do not represent you and cannot give you advice on completing these forms or any other matters related to the transaction. If you have questions, you should contact your own resources such as an attorney or accountant.”
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© Copyright Broker Risk Management 2010 10/08/10