Mixed opinions on real estate law
SUMMIT COUNTY – Real estate is confusing enough for consumers, says Frisco broker Chris Eby, and a bill currently in debate at the Colorado Legislature isn’t going to help. Other brokers think just the opposite.
Eby, exclusively a buyer’s agent, and his colleagues are keeping a keen watch on Senate Bill 196. He and other agents have testified before House and Senate committees, pushing legislators to scrap the bill.
The proposal, carried by Sen. Ed Perlmutter, D-Jefferson County, changes the definitions of duties real estate agents can perform. Under current law, a broker can act as a seller’s agent, a buyer’s agent, a dual agent representing both sides, or a more impartial transaction broker who negotiates with both sides, but does not advocate for either. Senate Bill 196 would eliminate dual agency and replace it with a new term, “designated agency.” If enacted into law, the proposal would make it illegal for a single agent to represent both sides, but make it legal for two agents working for the same firm to represent the buyer and seller in the deal.
“This was originally put up as a consumer protection piece by the state’s real estate commission and the Colorado Association of Realtors, their trade group,” Eby said. “But that’s a farce. This is creating an environment that is unavoidably fraught with temptation and conflicts of interest.”
Eby is one of about 50 agents who exclusively represent buyers. The Colorado Association of Realtors (CAR) counts more than 19,000 licensees in its membership; these brokers may represent buyers, but also represent sellers. Eby is a member of CAR, but said he wouldn’t be able to use real estate listing services or key technology for his business if he wasn’t. Eby said he’s worried that his minority, although vocal, won’t be able to stop a Goliath-like industry that he believes is out to preserve “the double-dip.”
“Eliminating dual agency is a good thing, it’s admirable,” he said. “But unfortunately, “designated agency’ is almost the same thing. This is akin to a legal firm representing both husband and wife in a separation – they’re going to collect two times, but can they really represent each fairly?”
Breckenridge attorney Jay Bauer represents the Summit County Association of Realtors and has been following the bill as Eby has. Bauer said he thinks agents can represent clients fairly, even under the proposed law, and the bill more accurately reflects how business is already being conducted.
Bauer said the typical real estate consumer, whether buying or selling, doesn’t choose an agent based on the technical role the agent plays in the deal. The consumer wants to look at real estate, he said, and they’ll work with an agent they perceive to be professional and honest.
“And the truth is most brokers very naturally take up the banner for the party they’re working with – that’s human nature,” he said. “The obligation to be honest is no different for a transaction broker than it is for any of the different kinds of agents.”
Bauer countered Eby’s statements, saying many buyer’s agents are worried that their most powerful marketing tool – exclusively representing buyers – will disappear with the new legislation. Furthermore, Bauer said, the bill eliminates a buyer’s agent’s responsibility to inspect a property. Current law does not hold a seller’s agent or transaction broker responsible if a property buyer discovers problems after the sale, but does not protect buyer’s agents.
“I look at that as a bone they’re throwing out (to buyer’s agents),” Eby said. “The buyer’s agents I know are committed to their client’s interest and could probably care less about this. It’s just further diluting responsibility. Frankly, they could keep that the way it is if they took the whole bill away.”
Summit association president and Breckenridge Associate Andrew Biggin said the bill benefits agents and consumers in another way. The proposal eliminates vicarious liability, or one consumer’s ability to sue their counterpart for mistakes made by a real estate agent.
“If I’m broker and I make a mistake, working on either side, ultimately the buyer or seller could be held responsible for my actions,” Biggin said. “That’s not fair. With this legislation, vicarious liability goes away.”
Bauer and Eby said they agreed that the full impact of the legislation won’t be known until the governor signs it into law and the Colorado Real Estate Commission begins to interpret it. They also said they agreed that, in a perfect world, legislation would not be made to conform to human behavior, but the opposite.
Senate Bill 196 was passed in the Senate and House, and is back in the Senate for consideration of amendments added during the process. The bill will be debated in the three days remaining in the legislative session. Real estate sales in Summit County have totaled about $1 billion in the past two years.
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