Alaska might be the next state to put the controversial concept of dual agency on the chopping block. Lawmakers are close to passing a bill that would replace dual agency with the highly debated concepts of designated agency and neutral licensees.
The bill’s sponsors say it clarifies relationships between consumers and real estate licensees. But critics charge it does nothing more than trim agent and broker liability.
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The bill, HB29, would prevent agents from practicing dual agency, which occurs when one real estate broker represents both the buyer and seller in a real estate transaction. Instead, state law would allow one agent to act as a “neutral licensee” who could perform specific services for both the buyer and seller, but not represent either of them.
The bill recently passed a state House vote and now awaits action in the Senate. If it becomes law, it is expected to become effective Jan. 1, 2005.
Linda Garrison, broker/owner of AAR #1 Buyers Agency in Anchorage, believes the legislation has more to do with agent and broker protection than it has to do with consumers. She argued that the bill’s contents create a riskier situation for consumers than dual agency does.
“HB29 has nothing to do with clarifying agency, nothing to do with protecting the consumer, no benefits at all to the public. It removes protections already in place with the common law of agency,” Garrison wrote in an e-mail message.
Buyers and sellers who utilized a neutral licensee would be getting only services, not representation. Critics of the legislation question whether those buyers and sellers would grasp the legal implications of no representation. If the deal went awry, they might not be able to sue the broker or agent, for example.
The bill introduces the term “designated licensee,” a concept that would allow two agents from the same brokerage company to handle opposite sides of the same deal. A designated licensee works for a real estate broker and represents or provides specific assistance to a person in a real estate transaction when another licensee working for the same broker represents or provides specific assistance to an unrepresented person in the same transaction.
Garrison believes the arguments for designated agency sound like the same arguments that were used 10 years ago for dual agency, except that dual agency had a legal basis in common law, whereas “designated” agency is a made-up term.
“That’s bad enough, but couple it with abrogation of the gut of common law and the consumer is in deep trouble–and they won’t even know it,” she stated.
“I don’t really care what they call it, but when one agent in a company represents the buyer and another agent represents the seller–just elimination of the term