No More Little Surprises in the Mls Chain of Subagency
| Publication year | 1987 |
| Pages | 2159 |
| Citation | Vol. 15 No. 9 Pg. 2159 |
1987, December, Pg. 2159. No More Little Surprises in the MLS Chain of Subagency
Since the early 1980s and, coin-cidentally, the advent of buyer brokerage in Colorado, there has been much confusion about the agency status of real estate salespeople. The public and the real estate industry have been justifiably confused by the pronouncements of the courts of this and other states. Over the past seven years, courts have based their decisions about a sales agent's duty of loyalty more on the conduct of the agent and the expectations of the purchaser than on what had been considered by the real estate industry as the time-honored legal concepts of subagency.
This confusion produced what has been characterized as "an identity crisis," "agency by surprise," "undisclosed (or unintended) dual agency" and a handful of other hybrid forms of agency relationships. The door to suits against real estate brokers, salespeople, clients and customers (for rescission of real estate transactions, breach of agency duties, as well as fraud and misrepresentation) was wide open with many well-intentioned but befuddled parties being placed at risk.
The case law that highlighted the confusion was the Colorado Court of Appeals' decision in Little v. Rohauer.(fn1) The Rohauers, an out-of-state couple, sought the help of a real estate salesperson at Coldwell Banker in locating a Denver home. They were shown an "in-house" Coldwell listing. After executing a written contract, the sellers delivered a title commitment to the listing agent, but the commitment was not delivered to the buyers by the deadline specified in the contract. When the buyers notified the selling salesperson that they would not perform and stopped payment on their earnest money check, the sellers sued for return of their earnest money as liquidated damages.
The Court of Appeals affirmed the trial court's finding that the selling salesperson's conduct made her an agent of the buyers and, therefore, receipt of the title commitment by Coldwell before the deadline was imputed to the buyers, thereby making them liable for damages. Important to the court's holding was its finding that the conduct of the selling salesperson gave rise to an agency relationship with the buyers.
Little was informative because it presented a fairly detailed list of specific conduct which gave rise to the Court of Appeals' finding of an agency relationship. However, the holding was also the source of considerable...
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