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 fulfil 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.”


CAARE was quoted in Inman News yesterday

INMAN News Story Dual Agency, No consensus on real estate dual agency, double-ending quoted from CAARE’s website yesterday:

“Nonprofit consumer advocacy group Consumer Advocates in American Real Estate (CAARE) calls dual agency involving one agent “legalized fraud” and “the ultimate ‘bait and switch.’ ” The group’s argument is that when a previously represented buyer becomes interested in a home listed by the same agent, that agent can suddenly cease to be an advocate for the buyer.

“Dual agency is potentially one of the worst ‘bait and switches’ possible because it involves the ‘switch’ (abandonment) of a trusted adviser and advocate. Even with disclosures, consumers rarely expect the change in relationship that comes with dual agency and they are almost never prepared for the complete abandonment that defines dual agency,” the group said on its website.

CAARE has a lot of information on dual agency and is compiling more.  Feel free to contact us if you are interested.  Thanks Inman. 



Title Industry Association Supports Our Petition For Better Laws

The National Association of Land Title Agents ( announced their support for our petition to increase the RESPA statute of limitations (look back period) from 1 year to 6.  Click here to sign our petition.  RESPA is a consumer anti-kickback statute enforced by the Consumer Finance Protection Bureau.  A 1 year look back period is a joke among attorneys and makes this real estate consumer protection law nearly impossible to enforce in a meaningful way.  It is significant that the title insurance industry is regulated by this law and that NAILTA supports us that their own industry needs better regulation.

Prior to submitting our petition to the general media we have first submitted it to the industry.  Our logic is that if the regulated industry supports us, then Congress will have a difficult time defending a toothless real estate enfocement statute.  Today RESPA News (trade journal of the real estate industry) covered our petition as their lead story.  The first trade association to step up and support our consumer cause is NAILTA.

NAILTA is a trade association of the title insurance industry.   Here is their misssion:

Who Is NAILTA?  

The National Association of Independent Land Title Agents (NAILTA) is a non-profit trade association that represents the interests of independent title insurance agents and independent real estate settlement professionals from across the United States. It was created by independent real estate settlement professionals to further the agenda of small business owners from within the title insurance, abstracting, surveying, and real estate community who lack representation at local, state and national levels. As an independent agent and settlement service professional, your voice is important and we want to hear from you! Join NAILTA today – it’s quick and easy! 

NAILTA seeks to: 

1. Restore transparency and credibility to the land title process and preserve an objective and impartial role at the closing table to improve the consumer experience.  

2. Address the proliferation of controlled business arrangements and eliminate conflicts of interest between title agents and their referral sources, as well as, between all real estate settlement service providers and their sources of business.  

3. Establish a minimum search standard for title examinations to restore faith in the system of land title.  

4. Knit together common interests and concerns from across the country and across the entire spectrum of real estate settlement service providers to successfully advocate for independent agents and their like-minded partners in the real estate settlement service community in order to effect positive change on the title industry.

Minnesota Attorney General’s Office is Misleading Consumers

The Minnesota Attorney General’s Office (“AG”) has got it all wrong on the section of their webpage dedicated to housing.  And apparently, they don’t care as we’ve been trying to call their attention to this problem for over two months. In these difficult times when the housing industry has financially wiped out so many consumers, how is it possible that the AG’s office could be so apathetic about the information they provide to the consumers they’re supposed to be representing.

From dual agency to title insurance, apparently the AG in Minnesota doesn’t understand the consumer housing industry and has no qualms about spreading mis-information to Minnesota consumers.   

For example, shopping and comparing title insurance is a complex and often intimidating process for those consumers who attempt it.  However, if consumers rely upon the AG’s office for advice in this matter, they can expect to over pay for their title insurance.

Here’s mis-information from two different sections on title insurance quoted directly from the Minnesota AG’s website:

A savings on the cost of title insurance, when the buyer uses the same title company that the previous owner used. Because the company is “re-issuing” the insurance, it can offer a lower rate.” (NOTE: The Attorney General’s office has removed this miss-information from their book. However, much of their handbook is still out of date and contains other bad information).

Asking Can Save You $ (click to see page) Be sure to ask for a re-issue credit on your title insurance. If the seller bought an owner’s title insurance policy within the past few years, the same title company the seller used may issue you a new policy without redoing all the paper work. This can save you a lot of money!” (NOTE: The Attorney General’s office has removed this miss-information from their book. However, much of their handbook is still out of date and contains other bad information).

This is important because reissue credits can often save consumers as much or more than $500 on title insurance.   The truth is that reissue credits are available at ANY title company that offers them, not just the own the previous owner used as the AG’s site proclaims.  In fact, today one very large title underwriter, Old Republic National Title, eliminated reissue credits from their rate filing on new purchase transactions, so if a consumer follows this advice they could easily be out several hundred dollars if they select a title company that uses that underwriter, like Burnet Title or Edina Realty Title.  And the discount has nothing to do with “reissuing” the title insurance, it is a discount offered because of the reduction in liability exposure.  Essentially, the new title insurer can “piggyback” upon the coverage offered in the previous policy.

But there’s more…

Reading through the AG’s website on “housing” is almost a lesson on how NOT to buy or sell a house.  Dual agency is explained in impossible to understand and incorrect terms.  The forms cited are all from the Realtor trade association perpetuating the myth that the Realtor forms are the “standard forms.”  We could go on and on…

Here’s the short list of problems with the AG’s website in regards to their “Home Buyer’s Handbook” starting with Section Four:

  1. “Visit Open Houses.”  Very bad advice.  Visiting open houses almost ensures that a commission dispute will arise if you later hire your own agent.   Open houses are traps that lead to dual agency and the listing broker “hogging” the entire commission.   Avoid Realtor open houses.  
  2. “You can also view listings online at:…”   Hang on a minute, is a commercial entity – from their website:  “ is independently owned and operated and is not affiliated with any of the over 900 local MLS systems. We offer the public access to multiple listings throughout the United States by providing advertising services for real estate agents and real estate related industries.”  Since when does the AG’s office offer free advertising to for profit firms?  If you want to search for listings, use a site such as or that accepts listings from both Realtors and home sellers.
  3. “Understanding the Purchase Agreement.”  Not one mention of using an attorney to draft this form.  Rather, they instruct the buyer to “read the purchase agreement thoroughly.”   This is the most important document in the whole transaction and contains numerous complex legal terms –  HIRE AN ATTORNEY.  And don’t wait until after your Realtor has drafted it – it’s too late then.
  4. “Arbitration.”  There is no mention of the extraordinarily high filing fees if you want to file an arbitration which can often be in excess of $600.   In addition, there is no mention of the boilerplate arbitration clauses that are often contained in listing and buyer representation contracts.
  5. “Title Insurance.”   No mention of the difference in costs or the very large difference in insurance coverage offered by different types of policies.
  6. “Dual agency…The term refers to an agent representing a buyer in an offer on a house when that agent actually owes a duty to the seller of the house.” SERIOUSLY?  Dual agency is an impossible conflict of interest where the agent owes duties to BOTH parties.  This section goes on to discuss “equal” representation and other made up terms that confused even us:  “Unfortunately, not agreeing to dual agency may prevent you from buying a home listed by your agent’s company. You can cancel an agreement to dual agency for a particular property, if you choose.”  None of this is accurate.
  7.  “Business Relationship Disclosure.”   Poorly written, lacking in logic and completely inaccurate.  “Your agent may receive a referral fee or other benefits if he or she directs your business to these companies. Agents can be paid according to the number of referrals they make to an affiliated company.”  Referral fees are ILLEGAL!
  8. “Sample Purchase Agreement.”  It’s an out of date Realtor form on their site…
  9. “Appendix E: Explanation of Closing Costs.”   It is possible that 50% of their quoted fees are completely out of date or inappropriate.  For example, most title companies have bundled all their fees together in an attempt to comply with new RESPA rules.
  10. “HUD-1 Settlement Statement.”  Again an outdated form.

We give Minnesota Attorney General’s website an “F” for causing consumers who rely upon a trusted resource to be terribly misled about the housing industries.