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What is the real estate broker's obligation to the builder, when he is
representing the builder? Can he enter into agreements with the buyers to represent them? (i.e. work that needs to be completed in the house etc.)

Florida no longer permits real estate agents to enter into "dual agency"
relationships and sanctions those who do so through inadvertence. Brokers
may serve in two distinct representational capacities and as
"non-representational" brokers.

In "single agency" representation, the broker owes a fiduciary duty to the
principal (in this case, the builder/developer) and cannot "represent" the
interests of any other party. Should he come into possession of information
from a party he does not represent he has an affirmative duty to disclose it
to his principal. For example, should a buyer indicate to the agent that he
would pay a bit more if he had to, the agent would be in dereliction of
his/her duty if he/she failed to promptly disclose this to the seller
(assuming that the agent "represented" the seller as a single-agent).

An alternative mode of operation, "Transaction Broker" is recognized in
Florida. In this sort of relationship, the broker has no duties of loyalty
or obedience to either party, but has the duties of accounting, honesty,
fairness and disclosure of material facts that would affect the value of the
property not apparent to the purchaser but known to the broker. In this sort
of relationship, the broker acts in the role of a facilitator and is barred
from disclosing to either party information received as to negotiating
position, relative motivation, negotiating strategy and so on.

This being said, a real estate broker who represents a builder as a single
agent, would be able to handle negotiations with prospective purchasers for
terms and conditions of a purchase: he/she would simply be unable to
"represent" them and would have a duty to disclose to them that he/she does
not do so but is the agent of the builder.

In the context of a builder's on-site sales office, where the broker and
his/her salespeople were identified by tags/uniforms etc., as being part of
the sales operation, the requirement for explicit written disclosure is
waived since the "average" buyer would recognize that the sales personnel
are not independent agents but are acting within the scope of their
employment by the builder/developer.

Of course, a buyer seeking to be affirmatively "represented" by a real
estate agent other than that of the broker would be able to submit an offer
through his/her agent and the builder's agent would normally cooperate by
making an arrangement to compensate the buyer's agent. The builder's agent
would have an affirmative obligation to transmit any offer to the builder.
Compensation to other agents is not a requirement and would have to be
arranged by agreement between the builder and the broker as to how much (if
any) commission would be paid to the builder's broker and how that fee would
be split (if at all) in the event of a sale through an outside agency.

So in answer to your question: a broker "representing" a builder would have
all the obligations consistent with a fiduciary relationship: those of
loyalty, obedience, accounting as well as those imposed on any real estate
broker in his/her dealings with all parties: honesty, fairness and
disclosure of material facts that would affect the value of the property.


Return to "Frequently Asked Questions"



Unless otherwise stated square footage and lot dimensions appearing herein are derived from county records and may or may not be accurate.
If square footage is material to a transaction a survey or other measurement is recommended. This information deemed reliable but not guaranteed. Current or previous year’s taxes may not accurately forecast future property taxes. Property taxes can increase from one year to the next for various reasons.

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800 West Avenue, Miami Beach, FL 33139 USA
Licensed Florida Real Estate Broker
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