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Maryland and Designated Agency

Today CAARE wrote a letter to the Senators considering a licensing law change to the Maryland Real Estate Brokers Act.   To see our letter click here.

Maryland's current statutory scheme is contradictory in that it embraces the notion that designated agency can exist in a two tiered licensing scheme where the brokers are responsible for supervising their salespeople.  Here is an excerpt from our letter:

"Section 17-530(d)(1)(v)1]  of the Act allows salespersons to exceed the limits of the broker’s legal relationship with the client – an impossible result.  This part of the Act addresses the situation where dual agency occurs and the broker is legally prohibited from negotiating to the detriment or benefit of either party.  However, this section of the Act is incorrectly constructed in that it actually allows the salesperson, in a dual agency situation, to do exactly what the broker is prohibited from doing – negotiating price and terms.  How can a sub-agent of the broker (the salesperson) be allowed to negotiate on behalf of the broker’s client, when the broker is legally prohibited from doing so?   They cannot. 

How can the broker fulfill their licensing responsibility to supervise their salespeople when their salespeople are engaging in acts for which the broker is prohibited?   If the salesperson consults their broker about the legality of certain negotiating terms, how can the broker advise their salespeople when doing so will violate the Act.  The current statutory construction is logically flawed and needs to be revised. 

Although we understand how profitable dual agency is for large brokerages in that they get to keep a double commission, at some point we must balance the integrity of the licensing scheme and consumers’ interests.  The current Act does not do that."




1] §17-530 (d)(1)(v) Establishes that “An intra-company agent representing the seller or buyer may provide the same services to the client as an exclusive agent for the sell or buyer, including advising the clients to price and negotiations strategy, provided that the intra-company agent has made the appropriate disclosure to the client and the client has consented, as required by this section, to dual agency representation.”