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Single Party Broker vs.Transaction Broker (Agency Relationships) From Black’s Law Dictionary – 1996 edition:
vicarious liability: Liability that a supervisory party (such as an employer) bears for the actionable conduct of a subordinate or associate (such as an employee) because of the relationship between the two. See Respondeat Superior.
respondeat superior: [Latin: “let the master respond”] The common law doctrine holding an employer or principal liable for the employee’s or agent’s actions (including torts, i.e., “civil wrongs”) committed during the scope of employment. Also termed the master – servant rule.
In the past, real estate brokers have operated under the laws of agency which originated in English common law. Effective Nov. 1, 2000, Oklahoma became the seventh state to specifically define the neutral transaction brokerage relationship between brokers and their clients. The law was a result of four years of work between the State and the Oklahoma Association of Realtors.
It creates two categories differentiating the relationship between clients and their broker:
the Transaction Broker - a neutral third-party assistant with the ability to work with more than one party in a transaction;
and
the Single Party Broker – a true agency relationship with the ability to act solely on behalf of one client in a transaction, but also exposes the client to vicarious liability for any of their broker's errors, omissions or even unintentional fraudulent misrepresentations.
The law presumes that real estate brokers act as Transaction Brokers by default, and a written agreement is required to establish the single party relationship. Both relationships include duties of loyalty and confidentiality by which a broker may not disclose without permission:
1) That a party is willing to pay more or accept less than what is being offered;
2) That a party is willing to agree to financial terms that are different from those being offered;
3) The motivation of either party in selling or purchasing the property.
Additionally, both are required to:
1) Treat all parties with honesty;
2) Make timely presentations of all written offers and counteroffers;
3) Make timely accounting for all money received by the Broker in trust;
4) Keep the client fully informed regarding the transaction;
5) Disclose pertinent facts relating to the condition of the property or to potential title problems and easements, which were not disclosed by the Seller or are otherwise known by the Broker.
The only additional duties of the Single Party Broker (which potentially expose the client to the laws governing vicarious liability) are:
1) Perform all brokerage activities for the sole benefit of the party for whom the Single Party Broker is providing services in a transaction, unless prohibited by law;
2) Obey the specific directions of the party for whom the Single Party Broker is performing services, unless the directions are contrary to applicable statues and rules, or to the terms of the contract between Buyer and Seller.
This topic is explored in more detail in the Greater Tulsa Association of Realtors’ pamphlet, You Need To Know.
It is Keller Williams’ adopted general policy to function as Single Party Brokers. I disagree and prefer the Transaction Broker’s role because it does not reduce confidentiality, negates liability for you, and does not limit my position or efforts. I believe that the legislation was designed primarily as a reform to eliminate the liability on the part of a client and not an effort to reduce ethical representation. I do not believe the benefit of the additional duties of the Single Party Broker outweigh the potential risk to the client.
The choice is yours, and I will be glad to function in either role. There are two questions I will never ask anyone I’m working with: “What will you take?” or “What will you pay?”. I don’t want to know the answers.
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