• An amendment made to the Maryland Real Property Brokers Act will require agents to present signs at open houses disclosing whom they represent.
  • The "presumed agent" no longer exists in Maryland.
  • The changes go into effect on October 1.

A long time ago, there was a small town with one real estate agent. This agent helped people buy and sell homes.

Then the agent hired a friend. They bought and sold homes for people and earned a living as Friends Real Estate Co.

Everyone in the town knew that they worked for the same company. Maybe one was a buyer’s agent and the other focused on listings.

Although involving two different individuals, this example showcases how some people think about dual agency.

Not every consumer knows about it, some just may not care — and others watch it closely. (A court case involving an “intra-firm transaction” was the subject of a California Supreme Court hearing earlier this month.)

A recent change in the Maryland Real Property Brokers Act will require real estate agents to display a sign for potential buyer clients at open houses that clarify whom they represent.

The law also voids the idea of the “presumed agent” in the state, reflected in a change to the Maryland agency disclosure form.

The changes go into effect on October 1. Although the act itself has not been amended since 1999, the Maryland agency disclosure form has been updated multiple times.

What gets disclosed and when

“It’s an interesting scenario because what they’re trying to do is make it much more transparent, which is obviously a big step forward,” said Stephen Israel, president of Buyer’s Edge.

Israel’s company exclusively represents homebuyers.

“And forcing listing agents, essentially, to have a disclosure form at open houses is a good way to at least alert people who are not educated at all about the process that there’s a very real conflict of interest there.”

There are options for clients to have exclusive agency relationships, but Israel feels there is lack of clarity around that issue.

In the past, if a buyer’s agent was with a client at an open house and the seller was present, the buyer’s agent would have to disclose their buyer representation to the seller. This is no longer required.

“That’s pretty much common sense. The seller knows that if we’re showing a house to this buyer, we don’t rep[resent] the seller. We no longer have to give the seller who is at the house that we’re showing the paperwork,” said Ross Mackasey, immediate past president of the Greater Baltimore Board of Realtors and current sales manager at Long & Foster Greenspring Valley/Lutherville.

Mackasey described a time when the brokerage had to provide the disclosure pamphlets at open houses outlining the different types of agent representation.

“So there are exclusive seller agency types of relationships, as well as exclusive buyer agency relationships, but this new law in Maryland doesn’t address either,” Israel said.

“But Maryland’s law is certainly pushing toward the right side of consumer advocacy.”

The ‘presumed agent’ is no longer presumed

Another change in the Maryland Real Property Brokers Act is that there is no longer a “presumed agent,” which has been reflected in the state’s new agency disclosure form.

The “presumed agent” situation occurs when a client meets with an agent at a real estate office. The agent presents the client with papers to sign, but the client refuses and only wants to the see the house.

If the agent agrees to show the unofficial client the home, he or she is “presumed” to represent the buyer at that point, despite the fact that nothing has been signed.

Maryland’s new law requires clients to sign the paper in order for agents to represent them. Unless these papers are signed by the buyer, the agent is considered to be acting on behalf of the seller.

Section 17-530 of Maryland Code clarifies:

  • “(b)(1) A licensee who participates in a residential real estate transaction as a seller’s agent, buyer’s agent, or as a cooperating agent shall disclose in writing that the licensee represents the seller or lessor or the buyer or lessee.
  • (2)The disclosure shall occur not later than the first scheduled face-to-face contact with the seller or lessor or the buyer or lessee.”

“Unless we have the signed document, we would be showing that house not representing [the buyer], but representing as a sub-agent to the listing agent,” Mackasey said.

“We would have to tell them that we would show them the house, but we couldn’t represent them and we would be representing the seller,” he added.

The authority and duration of the document is up to the real estate agent. If the agent wants to take a risk that one client will buy one particular house, then the document should reflect representation of a single showing.

Mackasey said that from his standpoint, he prefers a six-month contract.

Editor’s note: An earlier version of this story incorrectly stated that open house attendees must sign a disclosure form; this is not the case.

Email Britt Chester

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