BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
The following were questions and answers asked during Broker Risk Management’s webinar, which were unanswered.
QUESTION NO. 1: Can we still use unlicensed California transaction coordinators (“TCs”) to assist with files? If so, what specific tasks are they permitted to perform?
ANSWER: Yes, but they can only undertake administrative tasks such as the following: ensure documents are in the file based on a checklist, filing, setting appointments and other purely administrative tasks. They may not communicate with clients or other agents regarding disclosures, sales price, terms, contingency removals, repairs, etc. They cannot draft documents.
QUESTION NO. 2: Do licensed TCs need to hang their licenses with brokerages or can they hold their license without actively practicing real estate?
ANSWER: Unless they have a broker license, if they do not hang their license with a particular brokerage, they cannot undertake any licensed activities. See answer to Question 1.
QUESTION NO. 3: What if a California-licensed TC has their license placed with another brokerage? Can we utilize those TCs, or must the TC be hung under our license?
ANSWER: BRM recommends against using TCs who are licensed with other brokerages. Because that TC is not licensed under your broker’s license, under the law they cannot engage in ANY licensed activity on your transaction. There are also confidentiality and privacy issues. For example, if the TC is working for you, but licensed with a different brokerage, does that other broker actually or even technically have access to your transaction files? What if that other brokerage is representing a party on the other side of the transaction? In addition, your insurance company will not cover a TC licensed with a different broker if they do any licensed activity whether authorized to do so or not.
QUESTION NO. 4: Our office sometimes uses virtual assistants. Sometimes they perform TC activities. Is this appropriate?
ANSWER: No, virtual assistants should never be utilized to undertake any activities for which a real estate license is required.
QUESTION NO. 5: Do TCs generally carry their own insurance?
ANSWER: Some insurers will issue insurance to TCs. However, the insurance should be reviewed carefully to ensure adequate coverage and request that your brokerage be added as an additional insured.
QUESTION NO. 6: Agents market properties and aspects of property as “new.” How do you suggest that agents or buyers clarify this issue?
ANSWER: It is risky using the word “new” in real estate advertising. New indicates that something is brand new. However, the seller or listing agent may believe that something that is six months old could be new. Given this discrepancy, agents are discouraged from using the word “new.” If the word new is used by a listing agent in advertising, a buyer or a buyer’s agent should ask the question, “How old is that item?” to provide clarification.
QUESTION NO. 7: When a buyer’s agent asks a listing agent why sellers are selling their property, what is the best response if the seller has said not to disclose confidential information?
ANSWER: It is a good idea for listing agents to discuss this question with the seller in advance as it is a common question from buyers. Anticipate this question, agree with seller upon a response and document seller’s approval to relay that answer to a buyer.
QUESTION NO. 8: You reference that the requirement of a buyer representation agreement is a new law. Is it a new law or is it related to the NAR/CAR settlement?
ANSWER: Both. The NAR settlement requires a buyer representation agreement before touring/showing a property with a buyer while representing the buyer in the transaction. After the NAR settlement was reached, the California legislature passed a requirement that buyers’ agents have buyer representation agreements before representing a buyer in a transaction. The DRE will shortly be issuing a new regulation making clear when that agreement must be signed to comply with the new law. It is anticipated that the new regulation will match up with the NAR settlement.
QUESTION NO. 9: I am selling a trust property. There are multiple siblings named in the trust, but only one has been designated as the trustee. As a listing agent, am I required to involve all of the siblings in the sale process or only work with the named trustee?
ANSWER: You are required to work with the trustee. It is recommended that you send a copy of the trust to the title company to determine who has authority to sell the property. You should deal with that person only. The other siblings, in your scenario, are likely beneficiaries and do not have input into the sales process.
QUESTION NO. 10: Is the agency disclosure the first contract signed before a representation agreement with a buyer.
ANSWER: The agency disclosure is not a contract; it is a required disclosure by Civil Code §2079, et seq. It needs to be signed no later than the signing by a buyer representation agreement. Remember that, in the case of a seller, the agency disclosure must be signed no later than the signing of the listing agreement.