Brokerage Practice, Agency Relationships, and Disclosures
Brokerage practice, agency, and disclosures
This domain tests how Massachusetts licensees actually run a brokerage: listing and buyer-agency agreements, fiduciary duties, and the property-condition disclosures that must appear in a transaction. Questions often turn on who represents whom and which disclosure is triggered at what point.
Listing and buyer-agency agreements
A broker needs a written agreement signed by the party to be charged to collect a commission. The three common listing types are open listing (seller can use multiple brokers and owes only the one who procures the buyer), exclusive agency (one broker, but seller may sell without paying), and exclusive right to sell (broker is paid regardless of who finds the buyer). Buyer-agency agreements should also be written and should state the term, compensation, and whether it is exclusive.
Fiduciary duties
Licensees owe obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Confidentiality survives termination of the agency. A facilitator is not an agent and owes no fiduciary duty, but still owes honesty and fair dealing.
Mandatory disclosures
- Agency disclosure form at first personal meeting.
- Lead-paint disclosure for pre-1978 housing (federal), with the EPA pamphlet and acknowledgment.
- Septic-system Title V inspection and the Property Transfer Notification in the purchase and sale agreement.
- Smoke and carbon-monoxide detector certificate before closing.
Worked example
A seller signs an exclusive-right-to-sell listing. The broker markets the home, but the seller personally finds a buyer. Because the listing is exclusive right to sell, the broker is still entitled to the commission. If the seller had signed an exclusive-agency listing, the seller would owe nothing because the seller procured the buyer. The agency disclosure form must still have been given to the buyer at the first meeting, and the buyer should be told the broker represents the seller.
Traps
Treating an exclusive-agency listing as an exclusive right to sell. Assuming a facilitator owes loyalty. Skipping the lead-paint acknowledgment because the buyer waived inspection. Failing to include the Title V notification in the P&S.