A Frequently Asked Question by Hoboken Condo Buyers
When I work with buyers and make an offer for them I always do it in contract form. It is more formal and I believe gives your offer more weight. Part of the standard form contract package we use in New Jersey which is provided to us by the New Jersey Board of Realtors includes what is called an “Opinion 26″ letter.
Here is what that looks like: Opinion 26
This letter is legally required and is supposed to tell the buyer who the agent represents, who the title company represents, and that neither the agent nor the title company will provide legal advice to the buyer. If so desired, the buyer can hire real estate counsel. The letter explains to the buyer why it’s a good idea to do so.
Here in the world of Hoboken real estate, when an agent works with a buyer we are not really an “agent” in the legal sense of the word. We don’t normally sign a Buyers Agency Agreement. I don’t really know why we don’t but I’ve heard brokers claim it increases their potential liability. I guess they’re not familiar with the legal concept of “implied agency”. Nonetheless, here is what that agreement looks like:
Without a Buyers Agency Agreement, there is no contractual agency relationship created between the agent and the buyer. That’s why we are not really “agents” but more like sales people working with customer. The buyer is free to stop working with his or her not-really-an-agent at any time. Whether not using an agency agreement is a good idea or not is the subject of another post. In fact, I could probably write a book about our relationship with buyers and the complications that can ensue.
In any event, every time I check the box on the Opinion 26 form that says “I represent neither the seller nor the buyer” I get a call from my buyer saying – but I thought you were my agent!
We are all also required to provide all our customers with a “Consumer Information Statement”. It looks like this:
As a lawyer, I can honestly say it is not the best examples of legal writing I have ever seen. I believe its purpose is to explain to consumers the various relationships and how we can be on both sides of a deal – otherwise known as disclosed dual agency. In most states dual agency is illegal. It is recognized that there is an inherent conflict in serving two masters. Not in New Jersey.
When working as a “Transaction Broker” we are bound to treat our customers fairly and honestly. I think that is always a good idea in any business. Any member of the NAR and NJAR is bound by the Code of Ethics and, if he or she fails to live by it, a consumer can file a complaint. Once an offer is made and accepted, every buyer I have ever worked with has retained counsel. So even if I am not their formal agent or lawyer, they do have someone representing them and advising them on the legal implications of the transaction.
I thought it might be useful to try to expain all of this and let you all see and read these documents at a time other then when you are about to make an offer on a property and have a ton of other questions on your mind. Do you think this is a good system? Does it make sense to you? I’m curious to hear the consumers’ take on this scheme. Thanks for reading. Off to the gym before the snow starts!