Chapter 20

The Principal-Broker Relationship: Employment
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Listing Agreement
•	An employment contract between the owner/seller and the real estate broker
•	Interpretation: 
–	Advertisement
–	Offer to sell
Essential Provisions
•	CLOaC
–	Competent parties
•	Licensed broker
•	Competent principal
–	Consent to agreement
–	Legal Act (therefore must be licensed unless exempt)
–	Consideration
–	Signed by party to be charged
Listing Agreements
Additional Clauses
•	Signage & Marketing

•	Disclosure of defects
•	Compliance with law
•	Dual Agency

•	Duration of listing
•	Carry-over period

Listing Contract Types
Exclusive Right to Sell
•	The listing broker is entitled to a commission no matter who sells the property during the listing period.
•	This is the most common type of listing.
Exclusive agency
•	Similar to the exclusive right to sell except the owner may sell the property himself during the listing period and not owe a fee to the broker.
•	Broker may be less enthusiastic under this form of listing.
Open listing

•	There are no exclusive rights.
•	Whoever sells the property will earn the fee.
•	Brokers are reluctant to develop a sales effort.
Net listing
•	Owner states the price he wants for the property and agrees to pay the broker anything above this amount as commission.
MLS
•	A service among Realtor® members to offer compensation to other member brokers and increasing the market exposure for the listed property.
Broker Compensation
•	Commission earned when agreed between owner and broker.
•	Usually occurs when a “ready, willing and able buyer” is produced.
•	Procuring cause is the one whose efforts originated the procurement of the sale.
Compensation Types
•	Normally on a percentage basis
•	Flat fee commissions
•	Time and charges or other fee based on time and expenses
–	Advance Fee Listing
–	Advance Cost Listing
Fee Disputes
•	Common law: “procuring cause” of a ready, willing and able buyer.
•	Statutory law: when buyer “fully performs”
•	Anti-trust violation problems
Review of Listing Process
•	Meeting between Seller and Agent
•	Agent researches property 
•	Agent conducts CMA
•	Seller sets price
•	Agent and Seller negotiate terms
•	Execute listing agreement
•	Agent markets property
Termination of Listings
•	Expiration of Term (note listings must have an expiration) usually have a carry over period
•	Mutual Agreement
•	Abandonment or improper performance
•	Death or incompetence of broker
•	Bankruptcy of Seller
Buyer Representation 
•	Exclusive Authority to Purchase – an agreement where the broker works for the client, the buyer!
•	Primary responsibility is to the purchaser.
•	Principal is now the Buyer.
•	Buyer Agency!
Buyer Representation Compensation
•	Share commission with Selling Broker
•	Bonus commission over split
•	Flat Fee or Time and Charges 
•	Advance Fee/Cost

•	Problem defining “Procuring Cause” 
Selecting a Buyer’s Agent
•	Knowledge of market & neighborhood, zoning, taxes and price trends
•	Advise on financing and help obtain loan
•	Assist with determining housing needs able to obtain details about the neighborhood.
•	Obtain disclosures, advise on inspections, negotiate for you and supervise closing.
•	Respond to questions and concerns
Discount Brokerage
•	Varied compensation plans, commission based and hourly rates
•	Menu of services and “Pay as You Go” plans (commonly known as Al La Carte)
•	Most are independent or discount chains
•	May post listing to MLS
•	Often found as part of banks, attorneys and title agency
Sample “Al La Carte” Brokerage
•	Option 1 $269.00 Basic Flat Listing Plan
–	List your property in your local Realtor MLS system 
–	You retain the right to sell on your own and pay no commission at all
•	Option 2 $499.00 Premium Flat Fee Plan
–	Everything included from option # 1 basic listing package 
–	Contract and seller disclosures provided to sell your home on your own  
–	Comparative market analysis 
–	Call broker anytime with questions 
–	Lockbox
•	What’s Missing?
–	Advertising, other marketing, showings, “handling”
Key Terms
•	Advance fee listing
•	Broker
•	Exclusive authority to purchase
•	Exclusive right to sell
•	Multiple listing service (MLS)
•	Net listing
•	Ready, willing, and able buyer
•	Real estate listing
Chapter 21

The Principal-Broker Relationship: Agency
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Agency
•	Created when one person delegates to another the right to act on his behalf.
•	General agency – the right to bind the principal to perform a particular act.
•	Principal = Property owner
•	Agent = Broker 
•	Client = Principal

Establishing Authority
•	Written – contractual agreement. 
•	Implied – custom in the industry.  
•	Ostensible – conduct of the parties.
•	Ratification – agency established after the fact.
•	Estoppel – due to principles failure to maintain due diligence over the agent who exercises powers not granted him .
Agency Relationship

Broker’s Obligation to Principal

Disclosure Liability

Red Flags
•	“As Is”
•	Puffing
•	Lead base paint disclosure on homes built prior to 1978
•	Home Inspections

Buyer Agency

•	The exact opposite theory from the traditional seller representation.
•	Here the principal or client is the buyer!
•	Agent owes the care of agency duties to buyer.
Buyer Agency Types & Compensation
•	Types:
–	Exclusive buyer agency (also known as Exclusive Authority to Purchase)
–	Exclusive agency
–	Open Agency
•	Compensation
–	Share commission split as customary
–	Bonus commission over split
–	Time and Charges
Dual agency
•	Middleman
•	Disclosure problems
•	Ostensible authority
•	Price fixing
•	Principal
•	Puffing
•	Third parties

Agency Disclosure
•	Agency relationships can be created without written agreements and consumers must be informed who the agent represents so there is a clear understanding of the agents role in a transaction. 
•	Many states now require disclosure forms. 
Information

•	Owner disclosure information
•	Interstate land disclosure statements
•	Antitrust laws
–	Price fixing
–	Boycotting
•	Errors and Omission insurance
Key Terms
•	Agent
•	Boycotting
•	Commingling
Nebraska Agency Relationships
Nebr. R.R.S. 76-2401 et. seq. 
(Real Property)

Jan E. Beran
Attorney at Law
The Law
•	Nebraska Revised Statutes
•	Chapter 76, REAL Property
•	Article 24. Agency Relationships 
•	Cite as: Neb. R.R.S. Sections 76-2401 to 76-2430
•	Effect on Common law (§76-2429)
•	Sections 76-2401 to 76-2430 shall supersede the duties and responsibilities of the parties under the common law, including fiduciary responsibilities of an agent to a principal, except as provided in subsection (6) of section 76-2422.
The Common Law Fiduciary Responsibility Exception
•	Any [written] agreement, which exceeds the broker's duties and responsibilities contained in sections 76-2417 and 76-2418  shall be subject to the common-law requirements of agency applicable to real estate licensees. 
•	76-2417. Seller's agent or landlord's agent; powers and duties; confidentiality; immunity; disclosures required 
•	76-2418 Buyer’s agent or tenant’s agent…
Duties of a Seller’s Agent
Neb. R.R.S. §76-2417
•	To perform the terms of any written agreement made with the client; 
•	To exercise reasonable skill and care for the client; 
•	To promote the interests of the client with the utmost good faith, loyalty, and fidelity
•	To account in a timely manner for all money and property received; 
•	To comply with all requirements of sections 76-2401 to 76-2430, the Nebraska Real Estate License Act, and any rules and regulations promulgated pursuant to such sections or act; and 
•	To comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes or regulations

Duties of a Buyer’s Agent
Neb. R.R.S. §76-2418
•	To perform the terms of any written agreement made with the client; 
•	To exercise reasonable skill and care for the client; 
•	To promote the interests of the client with the utmost good faith, loyalty, and fidelity
•	To account in a timely manner for all money and property received; 
•	To comply with all requirements of sections 76-2401 to 76-2430, the Nebraska Real Estate License Act, and any rules and regulations promulgated pursuant to such sections or act; and 
•	To comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes or regulations.

Legislative Findings
Neb. R.R.S. §76-2401
•	the application of the common law of agency to the relationships between real estate brokers … and persons who are sellers, landlords, buyers, or tenants … has resulted in misunderstandings and consequences that are contrary to the best interests of the public, 
•	the real estate brokerage industry has a significant impact upon the economy of the State of Nebraska, and 
•	it is in the best interests of the public to codify … the relationships between real estate brokers … and persons who are sellers, landlords, buyers, or tenants….
The Heart of the Law
Neb. R.R.S. §76-2416(2)
•	A licensee shall be considered a buyer's or tenant's limited agent unless: 
•	The designated broker enters into a written seller's agent agreement (a listing) 
•	The designated broker enters into a subagency agreement with another designated broker 
•	The designated broker enters into a written dual agency agreement with the parties 
•	enters into a written agency agreement pursuant to subsection (6) of section 76-2422. (Common Law Agent)
Definitions of
Client and Customer

•	Client: a seller, landlord, buyer, or tenant who has entered into a brokerage relationship with a licensee 

•	Customer: a seller, landlord, buyer, or tenant in a real estate transaction in which a licensee is involved but who has not entered into a brokerage relationship with a licensee. 
Seller’s Agent’s 
Obligations to Customer
•	No duty or obligation to a customer 
•	Not disclose any confidential information about the client including:
•	That a seller or landlord is willing to accept less than the asking price or lease rate for the property; 
•	What the motivating factors are for any client buying, selling, or leasing the property; and 
•	That a client will agree to financing terms other than those offered.
•	Disclose in writing to any customer all adverse material facts actually known by the licensee 
Adverse Material Facts
Neb. R.R.S. §76-2417(3)(a)
•	Any environmental hazards affecting the property which are required by law to be disclosed; 
•	The physical condition of the property; 
•	Any material defects in the property; 
•	Any material defects in the title to the property; or 
•	Any material limitation on the client's ability to perform under the terms of the contract.

Duties of Seller’s Agent
Neb. R.R.S. §76-2417(1)(c)
•	Promote the interests of the client with the utmost good faith, loyalty, and fidelity 
•	Seek a price and terms which are acceptable to the client… 
•	Present all written offers to and from the client in a timely manner regardless of whether the property is subject to a contract for sale or lease or a letter of intent to lease; 
•	Disclose in writing to the client all adverse material facts… 
•	Advise the client to obtain expert advice…
Written Agreement 
With Seller Required
•	(In addition to typical contractual requirements)
•	A licensee's duties and responsibilities specified in section 76-2417  
•	The terms of compensation 
•	Specify whether an offer of subagency may be made to any other designated broker. 
Dual Agency
•	Neb. R.R.S. §76-2411 Dual agent has “the written informed consent of all parties to a contemplated real estate transaction, has entered into a brokerage relationship with and therefor represents both the seller and buyer”
•	 Neb. R.R.S. §76-2422(4) “…The agreement shall include a licensee's duties and responsibilities specified in section 76-2419 and the terms of compensation.”

Dual Agent Responsibilities
Neb. R.R.S. §76-2419
•	Dual Agent may disclose any information about one client to the other, except
•	That buyer is willing to pay more
•	That the seller is willing to accept less
•	What the motivating factors are regarding the purchase/sale
•	What financing terms either client is willing to accept
•	Dual Agents may not disclose to the a client confidential information about the other client
Disclosure of Agency Relationships
Neb. R.R.S. §76-2421
•	At the earliest practicable opportunity during or following the first substantial contact
•	Provide that person with a written copy of the current brokerage disclosure pamphlet 
•	Disclose in writing to that person the types of brokerage relationships the designated broker and affiliated licensees are offering 
•	Disclose in writing to that person which party the licensee is representing 

Disclosure Includes
•	General Information about agency law
•	Information about Buyer agency including the definition, responsibilities and obligations of agent to client/buyer and to customer/seller
•	Information about Seller agency including the definition, responsibilities and obligations of agent to client/seller and to customer/buyer
•	Information about Dual agency, and
•	Information about Common law agency
Compensation of Agents Under
Neb. R.R.S. §76-2401 - §76-2430
•	May be paid by the seller, the buyer, or a third party or by sharing the compensation between designated brokers 
•	Payment of compensation shall not establish an agency relationship
•	Single agent designated broker or subagent may share with another designated broker (by agreement of clients)
•	A designated broker may be compensated by more than one party if the parties consent in writing at or before the time of entering into a contract to buy, sell, or lease.  

Chapter 22

Fair Housing, ADA, Equal Credit, 
and Community Reinvestment
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Fair Housing—History
•	1866 – Civil Rights Act
–	All citizens of the United States shall have the same right in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold and convey real and personal property.
•	1948 – Shelley vs. Kramer
Fair Housing—History (cont.)
•	1968 – Civil Rights Act
–	Title VII of the act, the Fair Housing Act, outlaws discrimination in the sale or rental of housing on the basis of
•	Race, Color, Religion, or National Origin.
•	1968 – Jones vs. Mayer
•	1974 – Housing & Community Dev. Act
•	Gender
•	1988 – Fair Housing Amendment
•	Familial Status
•	Handicap

•	Race
•	Color
•	Religion
•	Sex
•	National Origin
•	Handicap
•	Familial Status

Illegal Acts

Illegal Acts

Americans with Disabilities Act
•	ADA enacted July1992.
•	Deals primarily with commercial property.
•	Provides access requirements and prohibits discrimination against people with disabilities.
Americans with Disabilities Act (cont)
•	Handicapped person allowed to make “reasonable modifications” as long as the premises are restored to original state at termination
•	All new multifamily must comply
•	HIV is a handicap

Exceptions
•	Federal: private individual owns 3 or fewer single family dwellings if:
–	Broker not used
–	No discriminatory advertising
•	Owner occupied 2 to 4 family dwellings
•	Religious organizations and private clubs as long as organization does not discriminate.
•	Certain housing for elderly
State and Local
•	Nebraska: prohibits discrimination based on “race, color, religion, national origin, familial status or sex” and handicap

•	Lincoln: prohibits discrimination based on “race, color, religion, sex, disability, familial status, national origin, ancestry or marital status.”
Fair Housing Enforcement
Complainant has burden of proof
File Complaint with…. 
•	HUD:
–	Investigation
–	Finding of “Cause”
•	Law suit:
–	After trial, damages may be awarded
•	U.S. Attorney General:
–	Generally civil and criminal penalties and injunctive relief
Equal Credit Opportunity Act
(ECOA)
•	Prohibits discrimination in credit transactions based on “race, color, religion, national origin, sex, marital status, age (not including minors), receipt of income from public assistance and good faith exercise of rights under ECOA or other consumer protection act.
•	Creditor prohibited from requiring certain information except for statistical purposes.
“Notice of Adverse Action”
(Credit Denial under ECOA)
•	Unable to verify credit references
•	Temporary or irregular employment
•	Insufficient length of employment
•	Insufficient income
•	Excessive obligations
•	Inadequate collateral
•	Too short a period of residency
•	Delinquent credit obligation
•	Incompleteness or fraud
Key Terms
•	ADA
•	Block Busting
•	CRA
•	ECOA
•	Familial status
•	Handicapped
•	Protected class
•	Steering
•	Tester