Editorial
Front Page - Friday, August 14, 2009
TAR releases new guide to Tennessee’s agency law
David Laprad
The Tennessee Association of Realtors, in cooperation with the Tennessee Real Estate Educational Foundation, has released “A Guide to Tennessee’s Agency Law” for real estate licensees, brokers and instructors.
The guide explains a key section of Tennessee law that has a direct impact on consumers and the real estate community. Members of the TAR and TREEF can download the guidebook for free from the association’s Web site, www.tarnet.com.
“The guide is not intended to be a lengthy, in-depth thesis on the law,” writes author Charles “Pug” Scoville, the director of communications and education for TAR, in his introduction to the guide. “Instead, it’s provided as a reference.”
The bookstore takes readers through a number of common misconceptions about agency law in Tennessee as well as a section-by-section presentation of the actual law with a brief commentary on each.
“Since the TAR is the second largest trade association in Tennessee, we felt it was necessary to address any confusion our members might have with agency law,” Scoville says in a TAR press release. “Agency law in this state has been amended twice since it originally passed in 1995, so it’s important for our more than 23,000 members to have the most up-to-date information to run their business successfully.”
Agency is not a difficult or complex concept, Scoville writes in the guide. “It’s all about representing consumers conscientiously, doing so with the consumer’s understanding and written agreement, steering clear of any conflicts of interest and ensuring that ... everybody in the transaction knows whom the licensee does and doesn’t represent.”
Yet some states haven’t defined, by means of a written statute, how agency is established, leading to confusion among newer real estate professionals in Tennessee and the spreading of misinformation by out-of-state instructors.
“The primary issue has to do with how a consumer becomes a client of a real estate professional,” Scoville says. “In many states, they can do so accidentally. The real estate professional working with them can say something that leads them to believe they’re a client.
“It can be something as simple as an unintended behavior or statement, and in some states, that’s all it takes for a court to hold that the real estate professional is in fact the agency of that consumer.”
The problem in cases where there’s a misunderstanding about agency on the part of either party is that when a real estate professional becomes an agent of a consumer, the job brings duties and the potential for liability. For this reason, the TAR formed in the early ‘90s an advisory group on agency law that worked to eliminate the possibility of accidental or unintended agency.
“It was our feeling that when a customer becomes a client, he ought to know it, having signed a written bilateral agreement to that effect,” says Scoville. “And a real estate professional should know he’s entered that relationship because he’s signed the same agreement, not because he’s done something accidental.”
Another goal of the advisory group was to recognize and accommodate the growing practice of buyer agency, Scoville writes in the intro to the guide, ensuring that buyer-clients are better informed and protected.
Scoville was a member of the advisory group and drafted what later became Tennessee’s agency law, drawing from a legislative proposal the Wisconsin Association of Realtors had developed, an agency law Ohio had passed and agency law in Colorado, among other sources. Parts of Tennessee’s law are also unique to the state.
“After the law passed, it was amended twice, first in the spring of 1996 to correct some housekeeping problems and then again a few years ago to define the responsibilities of a real estate professional to his client,” says Scoville.
The amendments, combined with a doubling of real estate professionals in Tennessee since the passage of the original legislation, were enough to convince Scoville it was necessary to publish a guide explaining Tennessee’s agency law. Another problem, stemming from an increase in the number of out-of-state instructors teaching agency without any knowledge of Tennessee’s laws, made doing so an urgent matter.
In many cases, lecturers were telling Tennessee real estate professionals they could become agents without knowing, which was incorrect.
To remedy the situation, the National Association of Realtors agreed to make “A Guide to Tennessee’s Agency Law” required reading for any instructor coming into the state to teach a pre-licensed or continuing education class.
In addition to dispelling the myth about the accidental creation of agency, the guide also contains sections dismissing the notions that real estate professionals can be both a seller’s agent and a facilitator for the buyer, that a real estate professional can sell his own listing without changing his agency status in the transaction to facilitator, that designated agency in intended solely for in-house transactions and many more.
The guide should be as legally airtight as it is comprehensive. Scoville ran it past three lawyers as well as the executive director of the Tennessee Real Estate Commission, who’s also a lawyer. And he and his staff had the input of a joint task force between the TAR and the education foundation that identified the most common problems and misunderstanding about the law.
Scoville says is feels “wonderful” to have the guidebook available to the public. “It’s been on my personal to do list for longer than I care to mention,” he says.
Scoville encourages every broker and instructor in Tennessee to acquaint himself with the contents of the guidebook. It’s available in PDF format by going to www.tarnet.com, clicking “NEWSROOM” on the left side of the homepage and scrolling down to the story titled “NEW! Guide to Tennessee’s Agency Law Is Now Available!”
Scoville says there are no plans to publish a print version, as the guidebook isn’t a moneymaking venture. “We just want the correct information to be disseminated.”
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