The Exclusive Buyer-Broker Agreement and Agency disclosure is a Utah real estate contract approved by the Utah Association of Realtors. It is a legally binding agreement between a Utah homebuyer and a real estate brokerage, including the real estate agent assisting with the sale. In short, the Buyer Broker Agreement is a commitment between the buyer and the agent to work together on the acquisition of real property. Real estate agents are usually paid 100% on commission and do not receive a paycheck until a sale closes. The Buyer Broker Agreement puts in writing that the buyer plans on purchasing a home with the help of a particular agent.
The Buyer Broker Agreement states that if “the buyer or any other person acting in the buyer’s behalf, acquires an interest in any real property, the buyer agrees to pay the Company a brokerage fee.” For example, if a buyer were to utilize the services of a real estate agent to preview homes for sale, and then decide to purchase a home without the help of the agent, the buyer may be responsible for paying a commission, usually in the amount of 3% of the sales price.
Typically there is never an issue with signing the Buyer Broker Agreement. In most cases, a buyer previews some homes with the Realtor and then ends up making an offer and closing on one of the homes. In these situations, the seller pays the commission for the buyer’s agent and there ends up being no cost to the buyer for real estate services. However, if a buyer is in contract with an agent, and then goes and purchases a home with the help of another agent, or without the help of an agent, then the buyer may be liable for the commission amount specified in the Buyer Broker agreement.
Understanding the Exclusive Buyer Broker Agreement & Agency Disclosure
Section 1 – Term of the Agreement
The buyer hereby retains the Company, including ____ (the buyer’s agent) as the authorized agent for the Company, starting on the Effective Date as defined in Section 15 below, and ending at 5:00 P.M. (Mountain Time) on the ____, or the closing of the acquisition of a property, whichever occurs first (the “initial term”), to act as the exclusive Buyer’s Agent in locating and/or negotiating for the acquisition of a property: (a) In ____ County, Utah; or (b) located at ____ (property address). During the Initial Term of this Exclusive Buyer-Broker Agreement and any extensions thereof, the Buyer agrees not to enter into another buyer-broker agreement with another real estate agent or brokerage.
Section 1 details the timeframe of the Buyer-Broker agreement as well as the location of the property.
Section 2 – Brokerage Fee
If, during the Initial Term, or any extension of the Initial Term, the Buyer, or any other person acting in the Buyer’s behalf, acquires an interest in any real property as referenced in Section 1 above, the Buyer agrees to pay to the Company a brokerage fee in the amount of $____ or ___%. of the acquisition price of the property (the Brokerage Fee). If the property acquired by the Buyer is listed with a brokerage, the buyer agent commission (BAC) paid to the Company by the listing brokerage shall satisfy the Buyer’s obligation for the Brokerage Fee show above provided that the BAC is not less than the amount shown above. If the BAC is less than the amount shown above, Buyer will pay the difference at closing. If the property is not listed with a brokerage, in the absence of a commission agreement with the owner of the selected property, the Brokerage Fee shown above shall be due and payable on: (a) If a purchase, the date of recording of the closing documents; (b) If a lease, the effective date of the lease; or (c) If an option, the date the agreement is signed. If the transaction is prevented by default of Buyer, the compensation shall be immediately payable to the Company.
Section 2 details the amount the buyer may be responsible for paying in the event that they do not comply with the terms of the agreement. Keep in mind that in most cases, the listing agent pays the commission to the buyer’s brokerage when the sale closes and in most cases, the buyer doesn’t owe anything to the brokerage.
Section 3 – Protection Period
If within ____ months after the termination or expiration of this Exclusive Buyer-Broker Agreement, Buyer or any person acting on the Buyer’s behalf, enters into an agreement to purchase, exchange, obtain an option on, or lease any property, as referenced in Section 1 above, located for Buyer by Buyer’s Agent or the Company, or on which Buyer’s Agent negotiates in Buyer’s behalf during the Initial Term, Buyer agrees to pay to the Company the Brokerage Fee referenced in Section 2.
If the contract expires, the Brokerage and Agent are still protected by the protection period for the homes they had previously shown the buyer, in the event that the buyer waits to purchase the property until after the contract has expired, or if the contract expires while the agent is still working with the buyer.
Section 4 – Buyer Representation/Disclosures
The Buyer warrants that the Buyer has not entered into any other Exclusive Buyer-Broker Agreement with any other brokerage that is still in force and effect. The Buyer will: (a) In all communications with other real estate agents, notify the agents in advance that the Buyer has entered into this Exclusive Buyer-Brokerage Agreement with the Company; (b) Furnish the Buyer’s Agent with relevant personal and financial information to facilitate the buyer’s ability to acquire a property; (c) Exercise care and diligence in evaluating the physical and legal condition of the property selected by the Buyer; (d) hold harmless the Company and the Buyer’s Agent against any claims as the result of any injuries incurred while inspecting any property; (e) Upon signing of this Exclusive Buyer-Broker Agreement, personally review and sign the Buyer Due Diligence Checklist form; and (f) Disclose to the Buyer’s Agent all properties in which the Buyer, as of the date of this Exclusive Buyer-Broker Agreement, is either negotiating to acquire or has a present interest in acquiring.
Section 5 – Agency Relationships
5.1 Duties of a Buyer’s Agent: By signing this Exclusive Buyer-Broker Agreement, the Buyer designates the Buyer’s Agent and the Principal / Branch broker for the Company (the “broker”), as agents for the Buyer to locate properties as referenced in Section 1 above for Buyer’s consideration and review. The Buyer authorizes the Buyer’s Agent or the Broker to appoint another agent in the Company to also represent the Buyer in the event the Buyer’s Agent or the Broker will be unavailable to service the Buyer. As agents for the Buyer, the Buyer’s Agent and Broker have fiduciary duties to the Buyer that include loyalty, obedience, full disclosure, confidentiality, reasonable care, and any other duties required by law.
5.2 Duties of a Limited Agent: The Buyer understands that the Buyer’s Agent and the Broker may now, or in the future, be agents for a seller who may have a property that the Buyer may wish to acquire. Then the Buyer’s Agent and the Broker may be acting as Limited Agents – representing both the Buyer and the Seller at the same time. A Limited Agent has fiduciary duties to both the Buyer and the seller as required by law. However, some of those duties are “limited” because the agent cannot provide to both parties undivided loyalty, confidentiality, and disclosure. For this reason, the Limited Agent is bound by a further duty of neutrality. Being neutral, the Limited Agent may not disclose to either party information likely to weaken the bargaining position of the other — for example, the highest price the Buyer will offer, or the lowest price the seller will accept. However, the Limited Agent will be required to disclose information given to the agent in confidence by the other party if failure to disclose such information would be a material misrepresentation regarding the Property or regarding the ability of the parties to fulfill their obligations. The Buyer is advised that neither the Buyer nor the Seller is required to accept a limited agency situation in the Company, and each party is entitled to be represented by its own agent. In the event a limited agency situation arises, the Buyer’s Agent and the Broker, as applicable, may only act as Limited Agents based on a separate Limited Agency Consent Agreement signed by the Seller and Buyer.
I suggest trying to avoid limited agency situations when possible. If I were buying or selling a home, I would want someone working exclusively for me, and not both parties.
Section 6 – Professional Advice
The Company and the Buyer’s agent are trained in the marketing of real estate. Neither the Company nor the Buyer’s Agent is trained or licensed to provide the Buyer with professional advice regarding the physical condition of any property or regarding legal or tax matters. The Buyer is advised not to rely on the Company, or any agents of the Company, for a determination regarding the physical or legal condition of the property, including, but not limited to: past or present compliance with zoning and building code requirements; the condition of any appliances; the condition of heating/cooling, plumbing, and electrical fixtures and equipment; sewer problems; moisture or other problems in the roof or foundation; the availability and location of utilities; the location of property lines; and the exact square footage or acreage of the property. As part of any written offer to purchase a property, the Company strongly recommends that the Buyer engage the services of appropriate professionals to conduct inspections, investigations, tests, surveys, and other evaluations of the property at the Buyer’s expense. If the Buyer fails to do so, the Buyer is acting contrary to the advice of the Company.
Real Estate agents specialize in negotiating and selling real estate. A buyer should consult with a professional home inspector, surveyor, or another expert if they have concerns with physical aspects of the property.
Section 7 – Dispute Resolution
The parties agree that any dispute related to this Exclusive Buyer-Broker Agreement, arising prior to or after the acquisition of a property, shall first be submitted to mediation through a mediation provider mutually agreed upon by the Buyer and the Company. Each party agrees to bear its own costs of mediation. If mediation fails, the other remedies available under this Exclusive Buyer-Broker Agreement shall apply.
Section 8 – Attorney Fees / Governing Law
Except as provided in Section 7, in case of the employment of an attorney in any matter arising out of this Exclusive Buyer-Broker Agreement, the prevailing party shall be entitled to receive from the other party all costs and attorney fees, whether the matter is resolved through court action or otherwise. If, through no fault of the Company, any litigation arises out of the Buyer’s employment of the Company under this Exclusive Buyer-Broker Agreement (whether before or after the acquisition of a property), the Buyer agrees to indemnify the Company and the Buyer’s Agent from all costs and attorney fees incurred by the Company and/or the Buyer’s Agent in pursuing and/or defending such action. This Exclusive Buyer-Broker Agreement shall be governed and construed in accordance with the laws of the State of Utah.
Section 9 – Buyer Authorizations
The Buyer authorizes the Company and/or Buyer’s Agent to (a) Disclose after Closing to each MLS in which the Company participates (consistent with the requirements of each such MLS), the final terms and sales price of the property acquired by Buyer under the terms of this Agreement; and (b) Communicate with the Buyer for the purpose of soliciting real estate related goods and services during and after the term of this Exclusive Buyer-Broker Agreement. The Buyer further agrees that in any transaction for the acquisition of any property, as referenced in Section 1 above, the Earnest Money Deposit may be placed into an interest-bearing trust account with interest paid to the Utah Association of Realtors Housing Opportunity Fund (UARHOF) to assist in creating affordable housing throughout the state.
Following the close of a sale, the sale price and terms are recorded on the MLS system for future market research purposes.
Section 10 – Attachment
Section 10 discloses whether or not there are any additional terms associated with the Buyer Broker Agreement. Additional terms would be detailed on a separate addendum to the contract.
Section 11 – Equal Housing
The Buyer and the Company will comply with Federal, State, and local fair housing laws.
Section 12 – Electronic Transmission and Counterparts
Electronic transmission (including email and fax) of a signed copy of this Exclusive Buyer Broker-Agreement and any addenda and the retransmission of any signed electronic transmission shall be the same as delivery of an original. This Exclusive Buyer-Broker Agreement and any addenda may be executed in counterparts.
Pretty standard in today’s world. Who delivers anything by hand anymore?
Section 13 – Due on Sale
Certain types of transactions may trigger what is commonly referred to as a “due-on-sale” clause. A “due-on-sale” clause typically states that the seller’s lender or mortgagee may call the loan due and payable in full if the seller participates in certain types of transactions. These types of transactions may include, but are not limited to, transactions where: (a) The sale of the property does not result in the underlying debt being paid in full; (b) The parties enter into a seller-financed transaction; (c) A lease option agreement is entered into; or (d) Any other unauthorized transfer of title to the Property has occurred without the lender’s consent. The Buyer understands that if any underlying encumbrances or mortgages on the Property contain a “due-on-sale clause,” and the “due-on-sale” clause is triggered, the lender may call the entire unpaid balance of the loan immediately due.
If you are purchasing a home with seller financing, and a due-on-sale clause exists with any outstanding liens, you could lose the property. Verifying the existence of a due-on-sale clause is crucial prior to closing.
Section 14 – Entire Agreement
This Exclusive Buyer-Broker Agreement, including the Buyer Due Diligence Checklist form, contains the entire agreement between the parties relating to the subject matter of this Exclusive Buyer-Broker Agreement. This Exclusive Buyer-Broker Agreement shall not be modified or amended except in writing signed by the parties hereto.
Section 15 – Effective Date
This Exclusive Buyer-Broker Agreement is entered into and is effective as of the date: (a) The Buyer and the authorized Buyer’s Agent or Broker have signed this Exclusive Buyer-Broker Agreement, and (b) The authorized Buyer’s Agent or Broker has received a mutually signed copy of this Exclusive Buyer-Broker Agreement (the “Effective Date”).
If you have any questions regarding the Utah Exclusive Buyer-Broker Agreement and Agency Disclosure please feel free to call Jared at 801.938.3333. If you are currently in contract with another Utah licensed Realtor, please contact your agent for questions.
This post refers to the Utah Buyer – Broker Agreement UAR Form 6 – revision date 3.19.2010.