Florida real estate law automatically creates a special relationship between customers and brokers in buying and selling a house. It is quite different from what you would expect and from what you get in some other states. It is called Transaction Brokerage and it is the default mode of operation if nobody says otherwise. And you should know about it because, in this scenario, the real estate broker is not really bound to care for the best interest for either the buyer or the seller. She is just there to facilitate the transaction.
The broker is also not bound to a full confidentiality. She is just not allowed to say if the buyer might pay more or if the seller would accept less. She is also not allowed to disclose any special motivation of either party to buy or sell the house. Aside from these matters, the broker is free to relay any information to the other party as she deems necessary and useful to make the transaction happen. Therefore you still need to be careful in what you say as a customer when you are dealing with a transaction broker.
The Real Duties That Are Required of a Transaction Broker
A transaction broker has 7 duties that she needs to perform under this type of relationships. Three of them are common with another representation mode which we described in another article and which is named Nonrepresentation. Such 3 duties are common to all real estate licensees in Florida and are as follows:
Account for all funds. All the money entrusted to the broker need to be accounted for.
Disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer. Any material defect of the house needs to be disclosed to the buyer by both the listing broker and selling broker (the one working with the buyer, if present).
Deal honestly and fairly. One expects a high level of honesty in this type of transactions, but this is a very subjective concept.
Please see the previous article for a full description of these first three duties. The four duties that are instead peculiar of the transaction broker are as follow:
Use skill, care. and diligence in the transaction. This means keeping informed on any law and zoning changes that might be relevant to the value of the property. It also includes being diligent in performing the various steps that are involved in the transaction.
Present all offers and counteroffers in a timely manner. One expects to be informed right away of any negotiation event. This is also true if the house is already under contract.
Exercise limited confidentiality, unless waived in writing by the parties. We described above the boundaries of this confidentiality. You can only add such information that either party has expressly requested to be kept confidential.
Perform any additional duties that are mutually agreed to with a party. This last requirement is a bit vague and subject to interpretation and errors on both sides of the relationship.
No Liability for the Broker
Also the transaction broker is not really responsible for the actions of the buyer and the seller, and has a limited liability in the deal. Because of this and because of the lack of any need for an upfront disclosure, many brokers decide to work only as transaction brokers in Florida.
It also allows them to deal directly with both buyer and seller and therefore get a double commission by only partially representing either one. It is as if the seller gets 50% of the representation and the buyer gets the other 50%. No one gets 100% unless asks for it. And in such a case a full agency relationship is established which we will describe in another article.