When buying or selling real estate in the State of Florida, it is prudent to understand the type of brokerage relationship you have with a real estate licensee. This relationship ultimately affects what duties the broker or sales associate owes you, how they may assist you, what information must remain confidential, and whether they are representing you as a client or simply assisting you as a customer.
Florida law recognizes three main brokerage relationship categories:
- Single Agent
- Transaction Broker
- No Brokerage Relationship
Unless a different relationship is established in writing, Florida real estate licensees are generally presumed to be acting as transaction brokers. Florida law also does not allow a real estate licensee to act as a disclosed or undisclosed dual agent, meaning a licensee cannot represent both buyer and seller as fiduciaries in the same transaction.
What Is a Single Agent Relationship?
A single agent relationship is the highest level of representation recognized under Florida brokerage law. In this relationship, the brokerage, through its real estate licensee, represents either the buyer or the seller as a client, but never both sides as fiduciaries in the same transaction.
Under Florida law, the duties of a single agent include:
- Dealing honestly and fairly
- Loyalty
- Confidentiality
- Obedience
- Full disclosure
- Accounting for all funds
- Skill, care, and diligence in the transaction
- Presenting all offers and counteroffers in a timely manner, unless otherwise directed in writing
- Disclosing all known facts that materially affect the value of residential real property and are not readily observable
The key difference when compared to the other brokerage relationships is that a single agent owes complete loyalty, obedience, confidentiality, and full disclosure to the client. This means that the licensee is expected to always work in the client’s best interest within the limits of the law.
For example, a single agent for a seller may help with a solid listing strategy, pricing discussions, reviewing and comparing offers, negotiating terms, and considering how different offer terms may affect the seller’s risk, timing, and net proceeds. A single agent for a buyer may help the buyer evaluate properties, advise prepare an offer, and negotiate terms that are in the buyers best interest.
What Is a Transaction Broker Relationship?
A transaction broker provides a limited form of representation status to a buyer, seller, or both parties in a real estate transaction. Brokerage relationship is the default representation in Florida unless a single agent or no brokerage relationship is established in writing.
A transaction broker does not represent either party in a fiduciary capacity. The broker may assist one or both sides, but the broker does not owe undivided loyalty to either party the way a single agent does.
Under Florida law, the duties of a transaction broker include:
- 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 real property and are not readily observable to the buyer
- Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing
- Limited confidentiality, unless waived in writing by a party
- Any additional duties that are mutually agreed to with a party
The most important concept is limited representation and limited confidentiality. A transaction broker may facilitate the transaction, assist with paperwork, communicate offers, and help the transaction move forward. However, a transaction broker does not owe the same level of loyalty or advocacy as a single agent. Florida REALTORS explains that a transaction broker may represent a buyer, a seller, or both, but not in a fiduciary capacity. If assisting both sides, the transaction broker facilitates the transaction but does not work to the detriment of one party over the other.
What Does “Limited Confidentiality” Mean?
Limited confidentiality is one of the most important differences between a transaction broker and a single agent. A transaction broker generally may not disclose certain confidential information, such as:
- That a seller will accept an offer that is less than the asking price
- That a buyer is willing to pay more than the amount offered
- A party’s motivation for buying or selling
- That a party will agree to financing terms other than those offered
- Other information a party has asked to remain confidential, unless disclosure is required by law or authorized in writing
What Is No Brokerage Relationship?
A no brokerage relationship means the brokerage or real estate licensee is not representing the buyer or seller and is not providing transaction broker services. The person is treated as a customer, not a represented client. However, even with no brokerage relationship, the real estate licensee still owes certain limited duties to the customer.
These limited duties include:
- Dealing honestly and fairly
- Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer
- Accounting for all funds entrusted to the licensee
This type of relationship may apply when a licensee is providing only limited assistance or when the licensee is clearly not acting as a representative for that person. A person in a no brokerage relationship should not expect the licensee to advise them on negotiation strategy, contract protections, offer price, inspection rights, financing contingencies, or whether a particular decision is in their best interest. The licensee may answer factual questions, but the licensee is not acting as that person’s representative during the transaction.
Final Thoughts on Florida Brokerage Relationships
Florida brokerage relationships are designed to define the role of the real estate professional and the duties owed to buyers and sellers. Understanding brokerage relationships helps buyers and sellers know what to expect and prevent misunderstandings about whether a real estate professional is acting as a fiduciary advocate, a limited representative, or simply providing limited assistance without representation.
Therefore, before sharing confidential information, relying on pricing guidance, or assuming that a licensee is working exclusively in your best interest, it is important to understand the brokerage relationship that applies between the parties.
Note Regarding Landlords and Tenants: Florida’s brokerage relationship disclosure requirements primarily apply to residential sales. Rental and leasing transactions may involve similar representation concepts, but the statutory disclosure requirements are not always the same. Buyers, sellers, landlords, and tenants should ask their real estate professional to clarify what type of brokerage relationship applies in their particular situation especially when moving forward with a transaction.
Under Florida law, “residential sale” includes the sale of improved residential property of four units or fewer, unimproved residential property intended for use of four units or fewer, and agricultural property of 10 acres or fewer.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. Brokerage relationship requirements may vary depending on the facts of a transaction. Buyers and sellers should consult qualified legal counsel or appropriate professionals for legal advice regarding their specific situation.
