Working Through Utah's Agency Disclosure Law
| Publication year | 1988 |
| Pages | 11 |
| Citation | Vol. 1 No. 2 Pg. 11 |
David W. Johnson, Esq. J.
On July 1, 1987, the state of Utah, through its Department of Business Regulation, joined numerous states across the country in adopting an administrative rule requiring real estate sales agents and brokers to disclose who they represent in each real estate transaction. The premise of the rule is that the consumer who deals with a real estate agent is entitled to know who it is the agent represents. With the benefit of a one year history, it would be useful to comment on the genesis, implementation, and projected impact of the agency disclosure rule.
In early 1983, the National Association of Real Estate License Law Officials (NARELLO) and the National Association of Realtors (NAR) commenced a joint, comprehensive study of trends in agency law as applied to real estate sales agents and brokers. In early 1986, both organizations, in very clear terms, expressed their support for regulations requiring agency disclosure. That support was based on increasing attention given in case law to agency relationships in real estate transactions and the critical nature of adequate agency disclosure.
In view of the priority placed on agency disclosure by NAR and NARELLO, by October, 1987, some 28 states had adopted by legislation or through administrative rule, laws requiring real estate licensees to disclose their agency relationship(s) in every real estate transaction. Utah's agency disclosure law was implemented through administrative rule in mid-1987. The text of the rule is as follows:
"AGENCY DISCLOSURE. In every real estate transaction involving a licensee, as agent or principal, the licensee must clearly disclose in writing to the buyer and seller, lessor and lessee, his agency re-lationship(s). The disclosure must be made prior to the buyer and seller, lessor and lessee entering into a binding agreement with each other and become part of the permanent file. When a binding agreement is signed, the prior agency dis-closure must be confirmed in a separate provision incorporated in or attached to that agreement, which shall be as follows: AGENCY DISCLOSURE. At the signing of this Agreement the listing agent____ represents () Seller () Buyer, and the selling agent______________represents () Seller () Buyer. Buyer and Seller confirm that prior to signing this Agreement written disclosure of the agency re-lationship(s) was provided to him/her. () () Buyer's Initials () () Seller's Initials."
History: Effective July 1, 1987 Specific Authority—Administrative Rule 6.14
General Authority—UCA 61-2-11(4)
The advantage of the rule to consumers is readily apparent. If prospective buyers understand that the agent who is showing them the property is, absent arrangements to the contrary, employed by the seller, and is being paid to assist the seller in getting the best terms and price for his property, then the buyers will be less likely to divulge their personal negotiating position on the mistaken belief that the agent is representing them. With a clear understanding of the agency relationship, the buyers can avoid the compromising position of telling the seller's agent, "Why don't you write up the offer at $75, 000.
We'll see what the seller does. If he doesn't accept it, we can always come...
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