July 2006 Field Report - Southeast Michigan
By: Tony Daunt – Southeast Michigan Field Director
Agency Responsibility Act: Update
As you may recall, the two bill package (HB 4849 & HB 4850) passed through the Michigan House of Representatives with nearly unanimous support on October 5, 2005. Upon House passage of the legislation, it was referred to the Committee on Economic Development, Small Business and Regulatory Reform in the Michigan Senate, chaired by Senator Alan Sanborn (R-Richmond Twp.). As a result of the overwhelming support in the House, it was expected that the legislation would be quickly taken up in the Senate. To that end, the MAR Public Policy staff began holding meetings with key senators and their staff, as well as with Gov. Granholm’s administration, to gauge support for the bills and address any concerns that they may have had. By the end of calendar year 2005, we had met with every senator (or one of their top policy aides) and determined that there was a considerable amount of support in the upper chamber as well.
Unfortunately, delays in the committee process allowed the mistaken arguments being made by the United States Justice Department to begin taking hold within the Governor’s office and among previously supportive members of the Michigan Senate. We indicated a willingness to work with the Granholm administration and members of the Senate who were suspicious of our motives to address their concerns in a manner that would work within the existing laws of doing business here in Michigan. Relatively assured that an agreement could be reached that would be acceptable to everyone involved, the bills were voted out of the five member committee with a bipartisan vote of 4-1.
The legislation was scheduled to be taken up by the Senate several times during the month of June, only to be scuttled by Granholm’s declaration that she would veto the bills should they be presented to her as written. This being Lansing, just the threat of a veto was enough to halt the process. And although we still enjoy the support of a majority of the Senators elected and serving, we have decided to step back and revise our battle plan.
We will continue to meet with the legislative leaders of the Senate and representatives from the Governor’s office to look for a solution that will fit her demands. However, we are not willing to acquiesce to her demands that would basically mandate every broker in the state of Michigan become a fee for service provider or override the steps we have taken over the years to become a leader in agency disclosure. You can be assured that as your field representative, I will continue to keep you update on the progress of this important legislation. Below is a brief synopsis of the bills I have discussed in this article.
House Bill 4849, introduced by Rep. Tonya Schuitmaker (R-Lawton), amends section 2512 of the Occupational Code to require that when a broker enters into an exclusive agency relationship shall, at a minimum, provide the following services to his or her client:
- When the real estate broker is representing a seller or lessor, the marketing of the client's property in the manner agreed upon in the service provision agreement.
- Acceptance of delivery and presentation of offers and counteroffers to buy, sell, or lease the client’s property or the property the client seeks to purchase or lease.
- Assistance in developing, communicating, negotiating, and presenting offers, counteroffers, and related documents or notices until a purchase or lease agreement is executed by all parties and all contingencies are satisfied or waived.
- After execution of a purchase agreement by all parties, assistance as necessary to complete the transaction under the terms specified in the purchase agreement.
- Furnishing or causing to be furnished, a complete and detailed closing statement as required by R339.22311 of the Michigan Administrative Code.
House Bill 4850, introduced by Rep. Kevin Green (R-Wyoming), amends the agency disclosure form by inserting the following under the subheading titled “Seller’s Agents.” A seller's agent providing services under an exclusive service provision agreement owes the following duties to the client:
- Marketing of the client's property in the manner agreed upon in the agreement.
- Acceptance of delivery and presentation of offers and counteroffers to buy, sell, or lease the client’s property.
- Assistance in developing, communication, negotiating, and presenting offers, counteroffers, and related notices or documents until a purchase or lease agreement is executed by all parties and all contingencies are satisfied or waived.
- After execution of a purchase agreement, assistance as necessary to complete the transaction under the terms specified in the purchase agreement.
- Furnishing or causing to be furnished, a complete and detailed closing statement.
From MAR’s perspective, this legislation is necessary to ensure the protection of the consumer and professionalism in the real estate industry.
Public Act 93 of 1993 and Public Act 236 of 2000 established buyers agency and designated agency that served to protect the public with clear disclosures and definitions of agency duties and contractual services. However, there is a loophole in current law that allows licensees to avoid performing specific fiduciary duties to their client by simply not accepting offers and evading all responsibilities to that client by contracting those duties away.
If passed, HB 4849 and HB 4850 would only apply when there is a listing contract that establishes an agency provision with a seller or buyer.
Examples of establishing agency are:
- Exclusive listing agreement
- Buyers Agency
In no way is MAR or the bills sponsors preventing the unbundling of services. Business models that offer discounted or unbundled services will still be in business and continue to operate if this legislation becomes law. This legislation is aiming to prevent individuals from pawning off advertising agreements as exclusive listing agreements. Agents who sign an exclusive listing agreement have responsibilities to their clients.
Examples of unbundling services would include:
- Advertising or Marketing
- Handling Open Houses
- Negotiating Offers to Conclusion
- Serve as a Transaction Coordinator
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Register to Vote
The Primary Election in Michigan in scheduled for August 8 and the General Election is scheduled for November 7. While not error-free, a Web site is available, where voters can enter their home address to see what candidates are running in their area. It is: http://www.vgt2004.org/a-mi-gannett/.
Voter registration forms are available from your city or township clerk, your county clerk, or the secretary of state’s office. If you do not already do so, you may want to include a couple in your documents when you close with a client.
REALTORS® take the political process very seriously and a great way to show that is to help new home buyers to register to vote.
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MAR Members Join BREBS
Congratulations to Sheri Fricke and James Sellman! They have both been appointed to serve on the Board of Real Estate Brokers and Salespersons (BREBS) by Gov. Jennifer Granholm for a term starting July 1, 2006, and expiring June 30, 2010. This board provides for the licensing and regulation of real estate professionals, including anyone who acts as a real estate appraiser, real estate mortgage broker, building job broker, business chance broker, and/or engages in the sale of real estate as a principal vocation. Should you come across either of these fine REALTORS®, please congratulate them on this honor.
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July 2006 Field Report
• Field Report
• Register to Vote
• MAR Members Join BREBS
Tony represents:
• Ann Arbor Area
• Dearborn
• Detroit
• CBOR
• Down River
• Grosse Pointe
• Lenawee County
• Livingston County
• MCAR
• Monroe County
• North Oakland County
• Western Wayne Oakland County
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