What to know about Florida real estate brokers and agents
Video Description
Real estate brokers are the people who manage real estate agents in Florida. Brokers and agents both owe certain duties under Florida law that can be limited by contract.
In this video Board Certified expert business lawyer David Steinfeld explains the laws that regulate real estate brokers and agents including those that regulate transactional broker arrangements and single-agent relationships. My Steinfeld defines the duties that brokers and real estate agents have to you in each type of relationship.
In this video Board Certified expert business lawyer David Steinfeld explains the laws that regulate real estate brokers and agents including those that regulate transactional broker arrangements and single-agent relationships. My Steinfeld defines the duties that brokers and real estate agents have to you in each type of relationship.
Video Transcript
I'm Dave Steinfeld, I own the Law Office of David Steinfeld and I'm a certified expert in Florida business litigation law. This video is for the real estate investor. It tells you what you need to know about real estate brokers. There's no legal advice in this video but for that you can contact me through DavidSteinfeld.com. And while you're there please take a look at the other informative videos and articles on business law and other topics. Thanks for watching.
The types of brokers in Florida
When we deal with brokers, real estate brokers, there are different types of brokers. I am going to first tell you the two different types of brokers in residential transactions and then we'll go into commercial transactions. Chapter 475 of Florida’s Statutes is what controls brokers and that even sets up the Florida Real Estate Commission.
There are two types of brokers in the residential setting. There are transactional brokers, that's one, and there are single brokers. Transactional broker will span the entire transaction. The transactional broker is going to represent both the buyer and the seller. That's allowed by Florida law as long as certain documentation is signed by the parties whereby they’re indicating that they understand the broker is able to represent both parties in the transaction. And there are a different set of duties that apply to the transactional broker than in the single buyer broker.
There are two types of brokers in the residential setting. There are transactional brokers, that's one, and there are single brokers. Transactional broker will span the entire transaction. The transactional broker is going to represent both the buyer and the seller. That's allowed by Florida law as long as certain documentation is signed by the parties whereby they’re indicating that they understand the broker is able to represent both parties in the transaction. And there are a different set of duties that apply to the transactional broker than in the single buyer broker.
Transactional broker duties
Some of those duties for the transactional broker are to deal honestly and fairly with the individuals, to account for all funds, use skill, care, and diligence in the transaction, to disclose all known facts that materially affect the value of the residential real estate and are not readily observable to the buyer and that sounds a lot like what we talked about in the prior video with Johnson versus Davis and it is. It's identical. It's the burden that's placed on sellers except for the fact that the real estate broker and I'll get into this in a moment, the real estate broker is not deemed to know the same information as the seller would. So you have to be careful about that. Lastly the transactional broker also has to present all offers and counter offers in a timely manner, has some limited confidentiality because they're spanning both parties unless that's waved in writing, and any additional duties that the parties would agree to which means you're not limited to those specific duties. What you can actually do is to, if it's necessary in particular transaction, to enter into a different agreement with the transactional broker modifying those.
Single agent broker duties
Now in contrast when you have a single agent broker the duties are a little bit different. They still have the duty to deal honestly and fairly with the people that they're representing, but they have additional duties of loyalty because they are only representing one party in the transaction. The confidentiality is much broader in a single agent transaction than in the transaction broker situation. There are duties of obedience and full disclosure to the principle that that broker serves and they also have duties for accounting for all funds, using, skill, care and diligence in the transaction, and disclosing facts that they know of that they are aware of that materially affect the value of the property.
Commercial broker duties
Commercial brokers don't have the same obligations that they do but there are some obligations that are imposed on them by law and they also do have a lien right for their commissions that I'll discuss in the next video in talking about brokers.
Limits on what real estate brokers do
Now what do brokers not do. Brokers are not home inspectors. Brokers have as I mentioned this duty to disclose material facts that they are aware of that impact the value the property, but they may not be aware of it unless the seller tells them about it.
So if the seller discloses to them in the case of the Johnson versus Davis situation that we talked about earlier that's in the prior video where the water was gushing in through the window and before the transaction the seller told Mrs. Davis we had that fixed. If the seller turns around and kind of tongue in cheek says to the broker we didn't have it fixed but don't tell them that, the broker is going to have this obligation to disclose that. But only where the broker knows about it.
But when you're dealing with the broker in real estate transaction, in residential transactions, the broker is not a home inspector. You can’t expect the broker to go climb around in the attic and make sure that the nails are the proper number of inches apart that they're supposed to be.
The broker is not a termite guy or gal to go find out that stuff. You can ask the broker and should ask the broker that you deal with as an investor to help you to find good, qualified people to do that. The broker should be guiding you but don't think that the brokers obligation is to find out physical defects with the property or the title. They should guide you to the professionals that can help you with that.
So if the seller discloses to them in the case of the Johnson versus Davis situation that we talked about earlier that's in the prior video where the water was gushing in through the window and before the transaction the seller told Mrs. Davis we had that fixed. If the seller turns around and kind of tongue in cheek says to the broker we didn't have it fixed but don't tell them that, the broker is going to have this obligation to disclose that. But only where the broker knows about it.
But when you're dealing with the broker in real estate transaction, in residential transactions, the broker is not a home inspector. You can’t expect the broker to go climb around in the attic and make sure that the nails are the proper number of inches apart that they're supposed to be.
The broker is not a termite guy or gal to go find out that stuff. You can ask the broker and should ask the broker that you deal with as an investor to help you to find good, qualified people to do that. The broker should be guiding you but don't think that the brokers obligation is to find out physical defects with the property or the title. They should guide you to the professionals that can help you with that.
