Legality Regarding Buyer Brokerage Form Prior to Showings in VA
Updated: Jan 26
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, 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)
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.
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 or caring about where you are coming from, 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.