Legality Regarding Buyer Brokerage Form Prior to Showings in VA
Updated: Nov 8
If you are ready to do showings or have questions that I am not legally allowed to answer without a buyer brokerage, I recommend that we sign a buyer brokerage agreement (BBA) prior to showings and my responses to certain questions to conform properly with the law as long as your intent is to buy.
Please keep in mind that I am not an attorney and that interpretations regarding these issues vary, so it is best in my opinion to see quotes with references on the issues. Here are the options & other details for the buyer brokerage agreement.
Above image courtesy Virginia Realtors Association
Basics Quoted
As laid out in VA codes54.1-2130 &54.1-2137, further detailed in this document from townhall.virginia.gov titled, "Guidance Document on necessity for brokerage agreement", "Is the party looking for the licensee to provide advice and counsel requiring the licensee to exercise his judgment or discretion for the purpose of procuring a seller... ready, able, and willing to sell...real estate? If so, this would require a written brokerage agreement."
The document further states, "showing a house may be ministerial if the licensee takes the party to see what the typical features are in homes in the market area or to gather information on the market or area. However, if the party asks the licensee to show him real estate because his intent is to have the licensee procure someone who is ready, able and willing to sell... real estate then a brokerage relationship exists requiring a written brokerage agreement."
Law made in July 2012
This law was clarified in July of 2012, so if anyone used a buyer’s agent for showings prior to then, it was when the law was more ambiguous.
Virginia Association of Realtors brief explanation
Here’s the legal issue in brief on buyer brokerage when using a buyer’s agent as shared in a document explaining your Realtor’s role published in 2012 by Virginia Association of Realtors:
When do I not have to sign a buyer brokerage agreement?
If you're asking an agent questions that are objective in nature, such as how many bedrooms a house has, where the agent isn't providing advice or giving their opinion, you don't need to sign a buyer brokerage agreement.
If you're seeing a home with a seller or listing agent for that property who represents the seller and don't wish to be represented by an agent, you don't need to sign a BBA. That said, you drastically increase the possibility of buying the wrong house if you do that. Much of the pros and cons of a purchase go beyond the scope of the home inspection & other inspections. See my "What I Offer Buyers" page for more details.
If you do not intend to buy, a buyer's agent could show you properties as a "ministerial act", but it would not be permitted for them to share with you any negatives about a property, even pointing them out without saying a word (i.e. settlement cracks, a leaky roof, etc.). It's also important to note that more often than not, the negatives that I find with properties are more numerous than positives, but I wouldn't be able to share any negatives as a "ministerial act". The way that I would conduct a showing should be completely different if under buyer brokerage vs doing it as a ministerial act, which "means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee's own judgment." When I perform a showing, I typically point out a dichotomy of positives & negatives as the primary basis for my feedback to you.
If you're purchasing a home unrepresented by an agent, you don't sign a buyer brokerage agreement. In that case, if using a REIN Standard Purchase Agreement (the primary offer used in Hampton Roads), you sign a "Disclosure of Brokerage Relationship to Unrepresented Party" form. Here's an example used primarily in the REIN MLS territory (the primary MLS of Hampton Roads), produced by REIN.
Related:
Court case examples
Here is an example of a court case where no buyer brokerage agreement was signed and how the real estate agent involved was prosecuted because of it. That document starts out by stating, “This case examines a scenario where the buyer’s agent did not engage in obtaining a written Buyer Brokerage Agreement. It is imperative that agents obtain a written brokerage agreement before engaging in any type of real estate representation. It is required under the Virginia Rules and Regulations, and protects your hard work while you work for your clients… The Board determined that Mr. Sheldon failed to disclose his brokerage relationship to the purchaser, in writing, before providing specific real estate assistance and ordered him to pay a fine of $400 and complete at least six classroom houses of Board-approved Post-License education pertaining to Contract Writing.” Here is another court case prosecuting a real estate agent for having no active buyer brokerage agreement established with a buyer.
Additional Required Disclosures
I also provide some optional disclosure forms (1, 2) that are highly recommended but not required at time of buyer brokerage, though receipt is required in some cases even if you don't sign.
In addition to the buyer brokerage form being signed if using a buyer’s agent, and in addition to optional forms, there are other forms that are required when using a purchase agreement. To state something on an offer that is not true is an example of misrepresentation (if doing so unknowingly) or fraud (if doing so knowingly).
For instance, if using a REIN standard purchase agreement, the most common offer form for offers in Hampton Roads.
Built into the REIN standard purchase agreement is the language in section 16 (page 10) as of 8/22/22 “Buyer and Seller acknowledge receipt of their REIN Consumer 491 Disclosure Information Form and Summary Of Rights And Obligations Of Sellers And Purchasers Under The Virginia 492 Residential Property Disclosure Act Form prior to entering into this Agreement.”
For those buyers who are not being represented by a buyer’s agent, when an agent is representing the seller, built into the REIN standard purchase agreement in section 16 (page 11) as of 8/22/22 is the language, “Buyer has signed the 505 Disclosure of Brokerage Relationship to Unrepresented Party form.”
“The Virginia Residential Property Disclosure Act (the “Act”) requires sellers of residential real property to disclose to buyers certain information known to the sellers regarding the condition of the property to be purchased. Seller and Buyer acknowledge that a Residential Property Disclosure Statement, attached hereto, has been provided by Seller to Buyer prior to ratification of this Agreement and if the Property is an exempted property pursuant to § 55.1-702 of the Act then this paragraph does not apply.” (page 11, section 16 C as of 8/22/22)
If the listing agent is attempting to act as a dual agent (legal in VA, illegal in some states, but prohibited at Garrett Realty Partners without management authorization), representing both buyer & seller, you should sign a disclosure of dual agency. The REIN contract in section 16 A 5 stipulates "Buyer and Seller have signed the Disclosure of Dual Agency or Dual Representation in a Residential Real Estate Transaction Form attached." VA law states, "A licensee may not act as a dual agent or dual representative in a residential real estate transaction unless he has first obtained the written consent of all parties to the transaction given after written disclosure of the consequences of such dual agency or dual representation."
There are numerous other forms that may be required depending on the circumstances
Other States
State laws vary considerably regarding buyer brokerage agreements. In some states, a written buyer brokerage agreement is still a good idea in many cases, but not required.
When to terminate a buyer brokerage agreement
My first advice here would be, before you get to the point where you are considering termination, be sure to express to your agent any problems that you might have with them as soon as they arise, not allowing issues to stack silently.
There are some cases when a buyer brokerage agreement should be terminated, with some agents being pretty bad as an agent or conducting grossly improper activities, and in some of those cases, the agent should not just be fired, but prosecuted.
For instance, a former prospective buyer told me once that with their previous agent, they had written their earnest money deposit out directly to that agent (illegal), and that when no offer was ever made, & the buyer was no longer looking, the funds were never returned. In a case like that, termination and additional prosecution would be warranted following an unanswered written request by the buyer for their money (ideally with a few follow-ups, since most people don't want to pay for attorneys or go to small claims court if it's much easier to spend a few minutes to follow up with someone).
There are other cases when a buyer mistakenly terminates a buyer brokerage agreement.
Often when termination of buyer brokerage occurs with an agent that's actually a good agent, and if they had been more verbally expressive of their feelings earlier, they would have had a significantly better experience. In many of these cases, the buyer has already made up their mind prior to practically any substantive discussion with the agent on the issues that are problematic, and at least 1 of the following is true:
1. The buyer may have some misunderstandings that their agent could clarify before their decision making process.
2. The buyer is frustrated primarily because they neglected to heed the prior advice of the agent, and forgot that the agent ever gave that advice.
3. The buyer makes up their mind to terminate when the buyer's agent actually would have been willing to change something about the way that they conducted business with that person if only the buyer had asked them prior to termination.
For more details, see, Termination of Listing or Buyer Brokerage Agreement With Agent & Their Buyers/Sellers In SE Virginia
How to terminate a buyer brokerage agreement
According to the Code of Virginia, § 54.1-2137. Commencement and termination of brokerage relationships as of 10/27/22:
"The brokerage relationships set forth in this article shall commence at the time that a client engages a licensee and shall continue until (i) completion of performance in accordance with the brokerage agreement or (ii) the earlier of (a) any date of expiration agreed upon by the parties as part of the brokerage agreement or in any amendments thereto, (b) any mutually agreed upon termination of the brokerage agreement, (c) a default by any party under the terms of the brokerage agreement, or (d) a termination as set forth in subsection G of § 54.1-2139."
If you're terminating a buyer brokerage agreement with a bad agent or an agent that did something grossly wrong even though they're typically good during the period of a buyer brokerage agreement, you may find that you have caught the agent in default of his side of the agreement or of the law.
If you're terminating a buyer brokerage agreement with a good agent, the "mutually agreed upon termination." Keep in mind that since your agreement is supposed to be with the agent's company, not the individual, they or their broker may wish to refer you to someone else at their brokerage.
If you feel that what the agent did was reprehensible or possibly even illegal, speak to their principal broker about it. If their principal broker is just siding with them and not understanding, not caring about where you are coming from, & denying material facts, consider going to the Virginia Real Estate Board's website to file a formal complaint.
What to do if a buyer's agent terminates their buyer brokerage agreement with you or refuses to sign a buyer brokerage agreement with you/work with you.
If a buyer's agent terminates their buyer brokerage agreement with you or refuses to sign a buyer brokerage agreement with you/work with you, it's a good idea to first take a look at why the buyer's agent did that. If they haven't stated the reasons, ask them. It's possible that they don't work your area in your price range. It's possible that there was a personality conflict. It's possible that their ethical standards were different than yours. In many cases, the agent will be honest about why they're unwilling to work with you.
In some cases, the agent won't be honest. If you believe that you are being discriminated against due to a protected class, it's a good idea to know the law. For instance, if you feel that you are being discriminated against because of your race or religion, it's good to first discuss the issue, as uncomfortable as it may seem, with the agent.
If you find that the reason why the agent won't work with you is because of something about you that you can change that would be positive for you, and the agent is a good agent that you spoke to, consider approaching your next agent differently if you sharing with the agent that you can change something about how you conduct yourself doesn't sway them. If you find that it's really a problem with the agent, not you, consider speaking to their principal or managing broker about it. Sometimes they will defend them (whether legitimately or out of loyalty), but sometimes they will admonish them. If you feel that their principal broker is just siding with them and not understanding or caring about where you are coming from, consider going to the Virginia Real Estate Board's website to file a formal complaint.
Legal Duties of Buyer’s Agents
Go to my article on the subject here for legal duties of buyer's agents in VA.
Not Having the Right Buyer's Agent Could Cost You
See my "What I Offer Buyers" page for more details.
Example A: For instance, if you are looking to buy a home to be a short-term AirBNB in Newport News where you aren't an owner-occupant, a knowledgeable agent about the area who cares about his clients could tell you that doing that is a bad idea since Newport News doesn't even allow that (me speaking at City Council Meeting along with a few dozen others prior to the legislation passing that night).
Example B: In another example, a seller disclosed the cost of flood insurance, but it wasn't until I asked the listing agent about previous flood history before the agent responded by sharing that 10's of thousands of dollars had been invested into the home to repair flood damage that had occurred not too long before the home was listed. While multiple other buyers made offers on the property, I found out before the buyer ever drove the long distance required to get to the property, so we were able to avoid wasting the buyer's time entirely.
Example C: In some cases, you won't even be able to get a property under contract unless you don't have an inspection contingency. While I typically recommend that buyers have an inspection contingency, that isn't always a viable option with a property with a high volume of offers. In cases like that, having an agent that will point out a high volume of positives and negatives in a showing is critical. Even if performing an inspection, if you use an agent who will point out many negatives prior to offer, it's possible that you wouldn't have even made an offer to begin with. Conversely, for a listing agent to point out negatives to the buyer, unless legally required (i.e. "material adverse facts/latent defects", though often many of these go undisclosed in reality), would be a breach of his obligations to the seller. As a buyer's agent, I've even seen where the house was built in a different (earlier) year than what's listed in the listing.
Example D: When I am unavailable for showings, I will typically seek to hire another experienced agent (typically one more experienced than me) to fill in for me. That said, I have a very high opinion of my style, and don't believe that any experienced agent that I can have fill in for me can my combination of digital & physical resources as well as my educational style for showings. At the time of this writing, I recently had a buyer close on a home following the initial showing being with an agent that was more experienced than I am. He's a great agent, with great reviews, and is a man I trust. He's not me though. The buyer didn't understand the disparity between me and other agents, and when he didn't point out a number of problems with the house, the buyer assumed that the house was in good shape. The buyer was purchasing from out of state. At the time of the home inspection, I did a video walk-through where I pointed out a number of items that the home inspector didn't, such as cosmetic items that were beyond the scope of the inspection and the fact that the home was on a busy street. The buyer failed to take a close look at the home inspection and failed to
See my "What I Offer Buyers" page for more details.
What's Required in a Buyer Brokerage Agreement
While a buyer brokerage agreement needs to be in writing in VA, all of the details of the 2 page form produced by Virginia Association of Realtors aren’t legally required, but the form being used (which I use as well) is the most common one in VA when buyer brokerage agreements are signed. If there is another standard buyer brokerage agreement in VA that you would like to use, please let me know if you plan to have me represent you, though my principal broker, Chuck Dunlap, believes it’s important that it’s an agreement that has been vetted by real estate attorneys.
According to the Code of Virginia, § 54.1-2137. Commencement and termination of brokerage relationships as of 10/27/22
"B. Brokerage agreements shall be in writing and shall:
1. Have a definite termination date; however, if a brokerage agreement does not specify a definite termination date, the brokerage agreement shall terminate 90 days after the date of the brokerage agreement;
2. State the amount of the brokerage fees and how and when such fees are to be paid;
3. State the services to be rendered by the licensee;
4. Include such other terms of the brokerage relationship as have been agreed to by the client and the licensee; and
5. In the case of brokerage agreements entered into in conjunction with the client's consent to a dual representation, the disclosures set out in subsection A of § 54.1-2139."
Looking Into Things Further
If you’d like to check into this requirement without consulting an attorney, I first recommend looking directly at the quotes in the context of the law. A real estate attorney might be the most expensive but can give you the best advice about how to interpret the law.
See also the opinion of Davis Law Group on ths subject.
If that doesn't satisfy your curiosity, just search Google.com for:
do you need to sign a buyer brokerage agreement with a buyers agent in Virginia
That said, I think a lot of publications use not enough quotes/sources cited & too general of statements. Here I sought absolute accuracy, though again, a real estate attorney would be a better judge of that than me.
If Googling the subject, you might be confused by VA code 54.1-2132 section G. That isn’t the chapter/section that covers the legal requirement for buyer brokerage for buyers using a buyer’s agent. See 54.1-2130 & 54.1-2137 for the requirement.
While most of those you'll find writing on the subject on Google get it right, I found one location that I would have thought would have been more accurate than most that got not only that but a number of other issues grossly wrong. It was a company that represented lawyers, so you would have thought that it would be reputable and vetted, especially with the positive reviews they posted, but no feedback directly on the page was possible. I submitted private feedback that the whole article should be reviewed, citing a number of problems to it. Also, if anyone ever makes the claim, "you don't need to sign a buyer brokerage agreement" I would agree under the circumstances that I've shared below.
What others have said about the buyer brokerage agreement law
While I may not agree with everything they are saying (& I don’t even when lawyers are in the picture as authors), here are some more publications on the subject by other Realtors & relevant quotes on the subject:
https://williamsburgsrealestate.com/2012/06/17/did-your-va-real-estate-agent-ask-you-to-sign-something-before-you-looked-at-a-home/ “Brokerage agreements must now be in writing. Further, they must be signed as soon as an agent meets and engages in any kind of “licensed activity” i.e. If you want to see a home that’s for sale you will have to sign a brokerage agreement or a non client agreement. If you refuse to sign an agreement or a non-client representation agreement, and an agent shows you a house, that agent would be in violation of Virginia State law!”
https://charlottesvillesolutions.com/explaining-virginias-new-buyer-brokerage-agreement-law/ “If you’d like to make an appointment to go see a house with one of our team of licensed REALTORs®, or any REALTOR® in Virginia for that matter, the state will now require that you first enter into a written brokerage relationship agreement with one of us regardless of whether this is the first time you’re contacting us to discuss purchasing a house or if you’ve been working with one of our Solutions team members for some time.”
https://elitescoop.com/virginia-real-estate-boards-guidance-document-for-brokerage-agreements/ “It seems that the largest source of contention to the new disclosure law is that the disclosures must be made prior to showing property to Buyers and those seeking to rent properties. Some instructors and brokers were denying that this requirement existed. To provide clarification, DPOR released a Guidance Document to help clear the air about when an agency agreements and disclosures must be signed by the potential clients (usually tenant or buyer). This Guidance Document provides insight into how the VREB will interpret the rule when challenged. The most important part of this document is the clarification that if a consumer wishes to see property with the intent of buying or renting, than an agency disclosure and agreement form must be signed before introducing the client to the property. This reinforces what instructors have or should have been teaching all along.”
"NOTE: This information is provided as a resource and does not constitute legal advice. The applicable Virginia Code sections should be consulted before taking any action based on this information, which is intended solely to provide an abridged overview... The entire Code of Virginia is accessible online and searchable at https://law.lis.virginia.gov/vacode . You should retain the services of an attorney if you need legal advice or representation (DPOR)."
Related:
1. Legal Duties of Buyer's Agents, Per Virginia Law
2. Termination of Listing or Buyer Brokerage Agreement With Agent & Their Buyers/Sellers In SE Virginia