New Year, New Agency Law 1/1/2024

Background

A major revision to the statute in Washington that regulates real estate brokerage relations (RCW 18.86) -- also known as the "Agency Law" -- takes effect on January 1, 2024. This is the first substantive revision to the law which was originally passed in 1996. The revisions modernize the law, provide more transparency and consumer protections, acknowledge the importance of buyer representation, and significantly alter the mechanism by which real estate firms and brokers representing buyers are paid. The revisions passed both the House (97-0) and Senate (46-0) in April, 2023 and were signed by the Governor on May 4.

The changes are part of a nation-wide sea change in how Firms and Brokers practice. The change has been brought about, at least in part, by important class action lawsuits brought against the National Association of Realtors (NAR) and several large Real Estate Brands. (Full disclosure: Bremerton Real Estate Company is a proud Realtor firm.) More background for  the major lawsuits can be found here and here. Last September, RE/MAX and Anywhere Real Estate Inc. (formerly Realogy) settled the lawsuits, although the settlements still have to be approved by the courts. The reported settlement amounts are $55 Million for RE/MAX and $83.5 Million for Anywhere. As of 10/11/23, NAR and the other real estate firms were still headed for trial. Update: 11/1/2023 The jury, after deliberating less than three hours, awarded $1.78 Billion the the plaintiffs. The amount is trebled, as a matter of law, to $5.36 Billion. NAR and the others who didn't settle say that they plan to appeal. Immediately after the court victory, a copycat lawsuit was filed, this time with estimated damages in the $60 Billion range.

Key Revisions to the Washington Law   

Until December 31, 2023, real estate brokerage firms were required to enter into
written agreements only with sellers, not buyers. Beginning on January 1, 2024,
the Agency Law will require firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and
buyers. This change is to ensure that buyers (in addition to sellers) clearly
understand the terms of the firm’s representation and compensation.
The services agreement with buyers must include:

• The term of the agreement (with a default term of 60 days and an option for a longer term);
• The name of the broker appointed to be the buyer’s agent;
• Whether the agency relationship is exclusive or non-exclusive;
• Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
• Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
• The amount the firm will be compensated and who will pay the compensation; and
• Any other agreements between the parties.

Additional Information and Source Material  

There are other changes to the law that provide additional consumer protections related to the duties that brokers owe to all parties in a transaction.

This is the new "Agency Law Pamphlet" and provides an overview of the revised law.

Here is a link to the Substitute Senate Bill 5191, which shows the entire law.

Contact us for more information on this (or any) Real Estate topic

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Post a Comment