Subchapter IV. Business Relationships with Consumers
TITLE 24
Professions and Occupations
CHAPTER 29. REAL ESTATE BROKERS AND REAL ESTATE SALESPERSONS
Subchapter IV. Business Relationships with Consumers
§ 2971. Applicability, interpretation, and the common law of agency.
(a) This subchapter applies to licensees in their business relationships with consumers, customers, and clients for all types of real estate transactions whether they are sales, leases, exchanges, management of real estate for others, or real estate counseling conducted by real estate licensees. In applying this subchapter to leasing transactions, the word "landlord" may be substituted for "seller", the word "tenant" may be substituted for "buyer", and the word "lease" may be substituted for "agreement of sale" where applicable. The terms "rental agreement" and "lease" may be used interchangeably.
(b) The common law of agency relative to brokerage relationships in real estate transactions established pursuant to this chapter is expressly abrogated for any real estate licensee functioning as a broker, salesperson, broker of record, broker owner, or brokerage organization as defined in this chapter as a statutory agent. This chapter is intended to occupy completely the field of law relative to brokerage relationships for those real estate transactions with the licensee or licensees functioning as statutory agents. For those areas where the public, licensees, regulators, or courts need further guidance as to the conduct of an agent, the clients and customers, the law governing independent contractor relationships shall apply to the extent it is not inconsistent with the provisions of this chapter. For transactions where the consumer hires a broker as a common law agent, and the broker agrees in writing to become the consumer's common law agent, the common law of agency applies to the extent it is not inconsistent with the provisions of this chapter.
75 Del. Laws, c. 277, § 6.;
§ 2972. Consumer Information Statement; confidentiality.
(a) The Real Estate Commission shall establish by regulation a Consumer Information Statement (CIS). The Commission may provide alternative Consumer Information Statements for residential properties, properties that do not contain any residential units, commercial transactions, property management, or other brokerage situations as the Commission deems appropriate. At a minimum, the form shall provide a summary of what a broker and salesperson are permitted or prohibited from doing as provided by §§ 2973 and 2974 of this title. The CIS shall explain the circumstances when the consumer may hire the licensee as a common law agent, but that this would require other detailed disclosures of conflicts of interests and could involve significant potential legal liability and financial risk for the consumer.
(b) The Consumer Information Statement required by this chapter shall be delivered to the consumer no later than the first scheduled appointment or showing of a property (whichever is earlier) unless they have already been given the CIS by another licensee involved with the transaction. The licensee shall give the consumer an opportunity to read the CIS before the consumer completes and signs it. The licensee shall retain a copy of the CIS for the file of the broker of record and the consumer shall be given a copy. A listing licensee who knows that the buyer is working with another licensee is not required to give that buyer a CIS. A licensee working with a buyer who knows that the seller is working with another licensee is not required to give a CIS to that seller. If a consumer refuses to sign the CIS, the licensee may indicate on the licensee's copy the date it was provided to the consumer. For a transaction begun or conducted without a face to face meeting, the licensee shall provide the CIS with other papers sent to the consumer by mail or by electronic transmission.
(c) The CIS shall be available to the consumer at open houses, but does not need to be personally presented by the licensee and signed by the consumer unless the consumer asks for more than factual information about the property or expresses interest in making an offer on the property during the open house.
(d) There is no form of brokerage relationship and no duties between a licensee and consumer other than the duties of confidentiality required by § 2973(c) of this title until the Consumer Information Statement is completed and received by the consumer and if applicable, the listing agreement or other brokerage agreement is signed. For transactions exempt from providing the CIS, the duties of the agent commence when the parties form an agency relationship.
(e) Nonrenewable leases of 120 days or less are exempt from the requirement to provide the CIS to the potential tenant; provided, however, that the duties of confidentiality required by § 2973(c) of this title and the rest of this chapter still apply to those leases. The broker of record may still choose to provide the CIS as a matter of office policy.
(f) Transactions of properties other than those marketed as:
(1) One to 4 family residential properties, or
(2) Single lot sales of land intended for a 1 to 4 family residence,
are exempt from the requirement to provide the CIS to the potential parties; however, the balance of this chapter shall still apply unless specifically exempted. In lieu of providing a CIS, the agreement of sale or lease shall include the following language after the confirmation of the agency relationships: The parties acknowledge that they have certain rights and responsibilities under Delaware agency law (Chapter 29 of this title) and may consult with their legal counsel.
(g) For rental of residential property not otherwise exempt from the requirement to provide the CIS, the CIS shall be given to the potential tenant at the first scheduled appointment or showing of the property, but does not need to be signed until the potential tenant decides to complete a rental application.
75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, §§ 3, 4, 10.;
§ 2973. Broker and salesperson as a statutory agent.
(a) Licensee is a statutory agent and broker may designate others. -- Unless specifically hired as a common law agent by a written brokerage agreement, a licensee is a statutory agent and not common law agent for any party. The broker owner or broker of record may from time to time designate 1 or more brokers or salespersons licensed under that broker of record or broker owner to be the designated broker or brokers or salesperson or salespersons of a client or clients to the exclusion of all others in the brokerage organization.
(b) Obligations and responsibilities. -- A broker owner, broker of record, brokerage organization, broker and salesperson shall to the extent applicable to their functions have the following obligations and responsibilities:
(1) Performing the duties required by this chapter;
(2) Performing the terms of the written brokerage agreement, if any;
(3) Exercising reasonable skill and care as a broker or salesperson;
(4) Advising the parties to obtain expert advice on material matters about which the broker or salesperson knows but the specifics of which are beyond the expertise of such broker or salesperson;
(5) Accounting in a timely manner for all money and property received;
(6) Helping to keep the parties informed regarding the progress of the transaction;
(7) Performing ministerial tasks to assist the parties in complying with the terms and conditions of any contract;
(8) Disclosing to all prospective buyers or tenants any adverse material facts actually known by the broker or salesperson;
(9) Informing the parties that they shall not be vicariously liable for acts of the broker or salesperson;
(10) Informing the parties that notice given to the designated broker or designated salesperson is considered notice to the client;
(11) Informing the parties that oral or written statements made by a broker or salesperson without the consent of the party do not bind the party and may not be relied upon by anyone as binding a party. As such, all statements and negotiations shall need to be authorized by or signed by the parties themselves to be binding on the parties unless otherwise stated in the brokerage agreement, agreement of sale, lease, or power of attorney;
(12) Complying with all requirements of this chapter and any rules promulgated pursuant to this chapter;
(13) Complying with any applicable federal, state, or local laws, rules, regulations, or ordinances; and
(14) Following fair housing and civil rights laws and regulations.
(c) Confidentiality. -- The following information shall not be disclosed by a broker owner, broker of record, brokerage organization, broker, or salesperson without the informed consent of the affected party:
(1) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property;
(2) That a seller or landlord is willing to accept less than the asking price or lease rate for the property;
(3) What the personal motivating factors are for any party to a transaction if the party requests them to be kept confidential;
(4) That a seller, buyer, landlord, or tenant will agree to terms other than those offered;
(5) Any material confidential information about the parties or property unless disclosure is required by statute or regulation or failure to disclose such information would constitute fraud or intentional misrepresentation;
(6) Any facts or suspicions regarding circumstances which may psychologically impact or stigmatize any real property pursuant to § 2930 of this title unless required to be disclosed by § 2930 of this title;
(7) Any facts or suspicions that any party or someone in the community is a registered sex offender under subchapter III of Chapter 41 of Title 11 as amended from time to time, but if asked shall refer the person to the Delaware State Police to seek this information; or
(8) For transactions of properties other than those marketed as:
a. One to 4 family residential properties, or
b. Single lot sales of land intended for a 1 to 4 family residence,
designated agents who are not dual agents are exempt from this subsection (c); instead, a duty of confidentiality by the agent to the client shall apply after a client relationship is formed.
(d) Actions permitted by broker and salesperson. -- A broker owner, broker of record, broker, and salesperson may do the following as an agent without breaching any obligation, duty, or responsibility to a client or customer:
(1) List and advertise competing properties for sale or lease;
(2) Show clients or customers alternative properties not owned by the broker's other clients;
(3) Show properties in which 1 client or customer is interested to other clients or customers;
(4) Disseminate information that is generally available to licensees. For example, providing information on comparable sales and the licensee's interpretation, advice, and opinion about this information with the client or customer retaining the authority to decide what to do with this information;
(5) Assist buyers and sellers in preparing offers and counteroffers providing the forms used advise the parties that they may seek legal advice prior to signing. Presenting all offers and counteroffers in a timely manner regardless of whether the property is subject to a contract for sale, lease or letter of intent unless instructed otherwise by the client;
(6) Develop negotiating strategies or options for how to proceed with a transaction;
(7) Perform ministerial tasks;
(8) Serve as a single agent, subagent, or disclosed dual agent for the same parties in different transactions or different parties concerning the same property. For example, the licensee could be a statutory agent for the sellers in 1 transaction and a common law agent for the same people as buyers in another transaction.
(9) Cooperate with other brokers; however, for 1 to 4 family residential property they shall not engage any common law subagents from other companies, brokers, or brokerage organizations.
(10) Disclose information concerning a transaction among the designated broker, designated salesperson or salespersons, broker owner, broker of record, and office staff working for the brokerage organization on that transaction.
(11) Provide customers with factual information they request. Provide clients with relevant factual information. Tell clients about their choices of how to proceed and provide them with relevant information. Provide clients with information and advice when presented with questions from the client or a request for advice.
(e) No imputed knowledge. -- There is no imputation of knowledge or information by operation of law among or between the consumers, customers, clients, broker owner, broker of record, broker, salesperson, brokerage organization and other licensees or persons within an organization.
(f) Notice. -- Notice as defined by law or in the agreement of sale or lease given to a party shall be considered effective notice. Unless specified otherwise in the agreement of sale or lease, notice only given to a designated broker or designated salesperson shall also be considered effective notice to the client of that broker or salesperson. Notice to the broker owner or broker of record is not considered notice to the designated broker, designated salesperson, or client. Notice only to the designated broker or designated salesperson is not considered notice to the broker owner, broker of record, or the rest of the brokerage organization.
(g) Statutory interpretation. -- Performing the functions of a statutory agent as described in this chapter and the rules and regulations of the Commission shall not be construed to automatically or by implication create a common law agency relationship. Subsections (b) through (f) of this section shall not apply to a common law agency relationship. Subsections (b) through (f) of this section shall be construed as rules of conduct describing how a broker or salesperson works for clients, works with customers, or interacts with the public as a statutory agent in the capacity of an independent contractor and not as a common law agent.
75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, §§ 5-7.;
§ 2974. Financial information.
Licensees do not have a duty to conduct an independent investigation of the consumer's, client's, or customer's financial condition and do not have a duty to independently verify the accuracy or completeness of financial statements made by the consumer, client or customer or any independent inspector, auditor, or lender, but if the licensee has actual knowledge of false financial information, the licensee shall advise the party to correct it and shall not pass on the information known to be false.
75 Del. Laws, c. 277, § 6.;
§ 2975. Internet and World Wide Web.
Entering a name and e-mail address on an Internet or World Wide Web site is sufficient to establish a broker-consumer relationship for the use of that system, but does not in of itself create a broker-customer or client relationship for any other purpose. The broker may deliver the CIS by the Internet or World Wide Web and the consumer may acknowledge receipt of it electronically. However, an exclusive business relationship or obligation for the consumer to pay any compensation may only be created by a written brokerage agreement signed by the consumer as a separate document. If the brokerage agreement is signed electronically it may not be part of a general consent to the terms of use of an Internet or World Wide Web site or other electronic device, but must be a conspicuous separate document.
75 Del. Laws, c. 277, § 6.;
§ 2976. Compensation agreements.
(a) Written brokerage agreements. -- Nothing in this chapter obligates a buyer, tenant, seller or landlord to pay compensation to a broker or brokerage organization unless that party has entered into a written brokerage agreement with the broker or brokerage organization specifying the compensation terms. The compensation agreement may specify that the brokerage organization, broker owner, broker of record, broker and salespersons may cooperate with other licensees. Brokers or brokerage organizations may compensate other brokers or brokerage organizations participating in the transaction without further permission of the party. The source of compensation does not by itself determine brokerage relationships. If a brokerage agreement contemplated 1 type of transaction such as a sale, but then through the course of continuous negotiations the initial transaction changes to another type of transaction such as a lease, the broker is still entitle to compensation; however, if the initial transaction was a lease which later became a sale, the broker is not entitled to compensation unless the listing agreement, other compensation agreement, or lease provided for compensation for a later sale.
(b) Additional terms. -- Nothing in this chapter shall prohibit consumers from entering into written brokerage agreements with a broker or brokerage organization which contain duties, obligations, or responsibilities which are in addition to those specified in this chapter.
(c) Different relationships permitted for different transactions or jurisdictions. -- A licensee or brokerage organization may work with a single party in separate transactions pursuant to different brokerage relationships including but not limited to selling 1 property as a seller's agent and working with that seller in buying another property as buyer's agent, or seller's subagent where permitted; provided, however, that the licensee or brokerage organization complies with this chapter in establishing the relationships for each transaction. A licensee who is licensed in another jurisdiction may function as a licensee for properties in that jurisdiction even if the brokerage relationship is different in that jurisdiction such as a "transaction broker", without being considered that status in Delaware.
(d) Compensation to entity of licensee. -- The broker or brokerage organization may pay the licensee's individual compensation to an entity created by the licensee to receive compensation providing the entity is either already approved by the Real Estate Commission as a brokerage organization or the entity does not need to be approved because it does not engage in the brokerage business but is only established for business purposes to receive the licensee's compensation. The salesperson or broker paid by the brokerage organization may employ licensed or unlicensed staff or team members who shall be paid an hourly wage, salary, or commission according to their agreement with the employing salesperson or broker. Nothing in 75 Del. Laws, c. 277 shall authorize unlicensed personal assistants, independent contractors, or employees to engage in activities which by statute or regulation of the Commission must be performed by a licensed individual.
75 Del. Laws, c. 277, § 6.;
§ 2977. Vicarious liability; protections when working with a statutory agent.
(a) A client shall not be liable for a wrongful act, error, omission, or misrepresentation of the brokerage organization, broker owner, broker of record, broker or salesperson except to the extent the client had actual knowledge of the wrongful act, error, omission, or misrepresentation.
(b) A brokerage organization, broker owner, broker of record, broker and salesperson shall not be liable for a wrongful act, error, omission, or misrepresentation of the client except to the extent the broker owner, broker of record, broker, or salesperson had actual knowledge of the wrongful act, error, omission, or misrepresentation.
(c) Nothing in this section shall be construed to diminish or limit any of the other duties or responsibilities of the brokerage organization, broker owner, broker of record, broker, or salesperson under this chapter, or the rules promulgated hereunder.
(d) This section does not otherwise limit the liability of a brokerage organization, broker owner or broker of record, for an act, error, or omission of a broker or salesperson licensed through that brokerage organization, broker owner, or broker of record. Notwithstanding any other provision of this chapter, the employer of the licensee is vicariously liable as the employer would be under the doctrine of respondeat superior whether the licensee is employed by the broker, broker owner, broker of record or brokerage organization as an employee or as an independent contractor.
(e) This section does not apply if the licensee or brokerage organization is hired as a common law agent.
75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, § 8.;
§ 2978. Commencement and termination of duties.
(a) Common law agent. -- The duties of a licensee as a common law agent and corresponding liabilities of the client begin and terminate based upon the common law of agency.
(b) Commencement of duties for a statutory agent. -- There is no form of brokerage relationship and no duties between a broker or salesperson and consumer other than the duties of confidentiality required by § 2973(c) of this title until the Consumer Information Statement is completed and signed by the customer or client and if applicable, the listing agreement or other brokerage agreement is signed. For transactions exempt from providing the CIS, the duties of the agent commence when the parties form an agency relationship.
(c) Duties of a statutory agent after termination. -- A brokerage organization, broker owner, broker of record, broker and salesperson, owe no further duty or obligation to the customer or client after termination, expiration, completion or performance of the transaction or other termination of the brokerage relationship, except the duties of:
(1) Accounting in a timely manner for all money and property related to, and received during the relationship; and
(2) Treating as confidential information provided by the client during the course of the relationship that may reasonably be expected to have a negative impact on the client's real estate activity unless:
a. The client to whom the information pertains grants written consent;
b. Disclosure of the information, such as defects actually known by the licensee or previously disclosed by the seller on the Seller's Disclosure of Real Property Condition Report, is required by law;
c. The information is made public or becomes public by the words or conduct of the client to whom the information pertains or from a source other than the brokerage organization, broker owner, broker of record, broker or salesperson; or
d. Disclosure is necessary to defend the brokerage organization, broker owner, broker of record, broker or salesperson against an action of wrongful conduct in an administrative or judicial proceeding or before a committee of a professional association.
75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, § 3.;
§ 2979. Duty to cooperate.
(a) Brokers and salespersons shall cooperate with all other brokers and salespersons involved in a transaction except when cooperation is not in the client's or customer's best interest. The obligation to cooperate does not include any obligation to share commissions or to otherwise compensate another broker or salesperson.
(b) In order to cooperate, brokers and salespersons shall be reasonably available when requested by their client or customer to:
(1) Accept delivery of and present to the client or customer offers and counteroffers to buy, sell, or lease the client's or customer's property, or the property the client or customer seeks to purchase or lease;
(2) Assist the client or customer in developing, communicating, negotiating, and presenting offers, counteroffers, and notices that relate to offers and counteroffers until the agreement of sale or lease is signed and all contingencies are satisfied or waived; and
(3) Answer the client's or customer's questions relating to the offers, counteroffers, notices, negotiations, and contingencies; and
(4) Hold the deposit money in escrow.
(c) In order to cooperate, brokers and salespersons shall be reasonably available when requested by a cooperating broker or salesperson to undertake the activities described in subsection (b) of this section, but only after disclosing the request to their client or customer and receiving written authorization to undertake the requested activity. If the client or customer fails to authorize the broker or salesperson to undertake the requested activity, the broker or salesperson shall not undertake such activity. If the broker's business model includes offering all of the services explained in the CIS, rather than having separate charges for distinct brokerage services, the CIS is sufficient disclosure and written authorization to undertake the activities described in subsection (b) of this section.
75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, § 9.;