7.2 Florida Brokerage Relationships

Three Relationships — and the Transaction-Broker Presumption

Section 475.278, Florida Statutes, authorizes exactly three brokerage relationships, and the exam tests them constantly. A licensee may act as a transaction broker, a single agent, or in no brokerage relationship. Florida law expressly states that a licensee may not operate as a disclosed or nondisclosed dual agent — "dual agency" is illegal in Florida, and any answer choice that calls a Florida arrangement dual agency is wrong.

The statute also sets a legal presumption of transaction brokerage: it is presumed that all licensees are operating as transaction brokers unless a single agent or no-brokerage relationship is established in writing with the customer. This presumption is why a licensee who hands a buyer nothing is treated as a transaction broker by default. Because the transaction-broker presumption exists, Florida abolished the old mandatory Transaction Broker Notice in 2008 — that particular notice is no longer required, which is a favorite distractor.

The Single Agent: Nine Duties

A single agent represents one party — buyer or seller — with full, fiduciary-level loyalty. The statute lists nine duties a single agent owes:

1. Dealing honestly and fairly
2. Loyalty
3. Confidentiality
4. Obedience
5. Full disclosure
6. Accounting for all funds
7. Skill, care, and diligence in the transaction
8. Presenting all offers and counteroffers in a timely manner (unless waived in writing)
9. Disclosing all known facts that materially affect the value of residential property and are not readily observable

The four duties unique to the single agent — and absent from the transaction broker — are loyalty, confidentiality, obedience, and full disclosure. If a question asks which duty distinguishes a single agent from a transaction broker, the answer is almost always loyalty (or one of the other three).

The Transaction Broker: Limited Representation

A transaction broker provides a limited form of representation to a buyer, a seller, or both, but does not represent either in a fiduciary capacity. The statutory transaction-broker duties are:

• Dealing honestly and fairly
• Accounting for all funds
• Using skill, care, and diligence in the transaction
• Disclosing all known facts that materially affect the value of residential property and are not readily observable to the buyer
• Presenting all offers and counteroffers in a timely manner (unless directed otherwise in writing)
• Limited confidentiality — the broker keeps confidential the seller's willingness to accept less, the buyer's willingness to pay more, a party's motivation, and prior offers, unless waived in writing
• Any additional duties mutually agreed to in writing

Notice the transaction broker keeps only limited confidentiality and owes no loyalty, no obedience, and no full disclosure. This makes the transaction broker a neutral facilitator who can work with both sides of a deal lawfully — the role Florida uses instead of dual agency.

No Brokerage Relationship

A licensee may also work with a customer in no brokerage relationship. Here the licensee owes only three duties: dealing honestly and fairly, disclosing all known facts that materially affect residential property value and are not readily observable, and accounting for all funds. This relationship is common when a licensee deals with a For-Sale-By-Owner or with an unrepresented buyer on the other side of the licensee's own client.

Required Notices and Timing

Since July 1, 2008, Florida no longer mandates the Transaction Broker Notice (because transaction brokerage is the presumption). Two written notices remain required, and timing is tested:

• Single Agent Notice — must be given to the principal before, or at the time of, entering into a listing or representation agreement or before the showing of property, whichever occurs first. It must be a separate, conspicuous document (or same-size-or-larger type if incorporated).
• No Brokerage Relationship Notice — must be given before the showing of property.
• Consent to Transition to Transaction Broker — required only when a single agent wants to convert to a transaction broker; the customer must give prior written consent.

A single agent who wishes to switch to transaction broker (for example, to facilitate a sale to an in-house buyer) must obtain the Consent to Transition to Transaction Broker before the change, and the form lists the limited duties that will then apply. The licensee may not disclose previously obtained confidential information after transitioning.

Designated Sales Associate

Florida permits a designated sales associate arrangement in a narrow situation: a nonresidential transaction in which both buyer and seller have assets of $1 million or more and both sign disclosures stating their assets meet the threshold and they request designated sales associates. The broker then designates one associate to represent the buyer as a single agent and a different associate to represent the seller as a single agent. This is the closest Florida comes to split representation, and it is never available in residential deals.