Webinar Recap: Using Buyer Agency Contracts

By Hope Walborn | Dec. 13, 2023 | 4 min. read

PAR President Al Perry joined Hank Lerner, PAR’s chief legal officer, to discuss a number of issues related to buyer agency on a PAR webinar on Dec. 11.

The session began with a brief summary of the current litigation environment. There are a number of active lawsuits all across the country that accuse various combinations of the National Association of Realtors®, state associations, local associations, MLSs and brokers of allegedly conspiring to artificially inflate the fees paid by consumers. In the first of those cases to go to trial, Burnett v. NAR et. al., NAR and two national brokerages were found liable, with an initial jury award of over $1.8 billion.

Perry reminded the webinar attendees that NAR has a number of member and consumer resources about buyer agency at competition.realtor. Lerner added that this site also has legal updates on the litigation from NAR, and that while NAR has announced its intention to appeal the judgment, PAR is unable to comment on NAR’s specific legal theories or tactics in the case. Members should continue to check the site for additional updates over time.

Lerner continued with the formal presentation on buyer agency. First he reviewed of some of the laws and regulations that apply to establishing buyer agency agreements and charging buyer agency fees. Specifically, Lerner noted that section 606.1(b)(1) of the Real Estate Licensing and Registration Act says that a broker is not entitled to collect a fee from a client unless they have an agreement establishing the fees. He also reminded attendees that the law and regulations also have lists of required items that have to be included in those contracts depending on the type of client relationship being created.

Next was a review of MLS rules related to listing broker offers of cooperating compensation. Lerner noted that while those MLSs that follow NAR’s model rules require listing brokers to “specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants,” NAR’s interpretation of that rule has evolved over time. Where they once advised that this rule required listing brokers to offer some sort of positive number as compensation (anything greater than zero, even if it was just $1 or $0.01), NAR policy has been updated to note that an MLS could interpret the policy to allow listing brokers to include cooperating compensation of zero if they wished. Members were advised to contact their own local MLS if they have any questions on those rules.

PAR offers members a number of resources related to buyer agency. Members were reminded that PDF copies of all PAR standard forms are available on the PAR website (password required), and that any new or revised forms are posted there with markups and explanations. PAR also publishes Guidelines for Preparation and Use for all forms, which are extremely helpful for agents and brokers who want to learn more about the details of the forms. Perry praised the ongoing work of the Standard Forms Oversight Committee in maintaining the PAR standard forms library, and it was noted that while no changes are immediately pending, the committee will be monitoring ongoing litigation to determine of any updates will be necessary.

Lerner reviewed a number of forms related to buyer agency, including the Buyer Agency Contract (Form BAC), Non-Exclusive Buyer Agency Agreement (Form NBA), Non-Representation Acknowledgement (Form NRA), Cooperating Broker Compensation Agreement (Form CBC), Compensation Addendum to the Agreement of Sale (Form CAS) and Broker’s Fee Agreement (Form BFA).

The webinar then wrapped up with Lerner reminding members that brokers have a key role in setting expectations for their agents and consumers through their agent training and education, and that brokers should consider reviewing and/or implementing compliance metrics to ensure that their agents are both following the law and brokerage policies, in order to reduce risks to the brokerage.

You can view this webinar’s recording online.

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