REINCheck

You're listening to REINCheck with Andrea Rice,

Contracts and Industry Specialists at REIN

where you get the latest member news

and information delivered straight from the source, REIN MLS.

Hello and welcome to REINCheck.

I am your host,

Andrea Rice, and today we are checking in with attorney

Brandon Allred

legal counsel for REIN’s Sales Managers Advisory committee

to discuss the changes to REIN’s buyer brokerage agreements

scheduled for release on July 22nd.

Brandon, thank you so much for being here today.

Well, Andrea, thank you for having me.

It's always a pleasure.

Thanks.

Yeah, and as all of you listening know, REIN released three buyer

brokerage agreements for members in February of this year.

And due to some recent changes

in the industry and requirements stemming from the NAR settlement,

these buyer brokerage agreements are being updated.

So, Brandon, do you mind giving our members

just a brief explanation

as to why they are seeing these changes now?

Yep, absolutely, Andrea.

So, as many of you already know, REIN

entered into the NAR settlement

and there are certain practice changes required

with respect to the way that REIN conducts business

as a result of the NAR settlement.

And those changes must occur by September of this year.

One of the practice changes requires that anybody

participating in the REIN MLS system

who was working with the buyer,

have a written agreement with that buyer prior

to entering any listing in the REINMLS system.

And then there are some specific requirements

for what must be included in those buyer broker agreements.

So the buyer broker agreements that were released in February

comply with the vast majority of those requirements.

But there's one item that the old buyer broker

agreements from February do not comply with,

and that is the requirement from the settlement agreement

that says the buyer broker agreement cannot permit

a buyer's broker to receive compensation for brokerage services

from any source that exceeds the amount or rate

agreed to in the buyer broker agreement.

And that amount has to be specifically and conspicuously disclosed

and readily ascertainable in writing in the buyer broker agreement.

So the concern here is that

the February version of the buyer broker agreement

includes a concept for excess compensation.

And we'll talk a little bit more about

excess compensation in a few minutes.

But what we are doing is releasing a new buyer

broker agreement without the concept for excess compensation

that is fully compliant with the settlement.

And we're doing that now in hopes

that people will have time to use the new buyer

broker agreement going forward before the September deadline.

And it's a September 16th deadline

and as a result of that,

we hope to have fewer of the February buyer broker

agreements in circulation by the time we get to

that September 16th deadline.

All right.

Thank you, Brandon.

That's a great explanation and background.

And I think that's

really helpful for our members who just saw the July one updates

and may be wondering, oh why this special July 22nd update.

And the July 22nd update is simply the buyer broker agreements.

So with all of that background

you've just given us,

do you mind going into the specifics in how those three buyer

brokerage agreements are changing coming July 22nd?

Absolutely.

So there are a couple of cleanup changes, but the major substantive

change that I want to highlight for everyone relates

to that concept of excess compensation

that we were just talking about.

So anyone who is familiar

with the February versions of the buyer broker agreements

will remember that there is a possibility

or that the agreements contemplate the possibility

that a seller could offer to pay compensation

to a buyer's broker in excess of the compensation that the buyer

has separately agreed to pay the buyer's broker

and the February versions of the buyer broker agreement contemplate

that if that happens, the buyer's broker will be entitled

to receive whatever the excess is as compensation.

That is no longer

permitted pursuant to the terms of the NAR settlement agreement

that REIN has joined in at least effective September 16th.

It will no longer be permitted.

The settlement agreement is very clear.

We can't have brokers receiving compensation beyond

what is expressly provided for in the buyer broker agreements.

The compensation must be conspicuously

and specifically defined and readily ascertainable,

and the February forms, at least with respect

to excess compensation, would not meet those requirements.

And then in addition to that, you'll see

another concept in the buyer broker agreement

that says if the broker is going to receive any compensation

from any other source whatsoever in connection with the transaction,

that has to be disclosed to the buyer in writing

and specifically

accepted and agreed upon by the buyer.

And that comes directly from the settlement agreement as well.

Great. Thank you.

And you did mention, too, that along with this, you know,

primary change that we're looking at in the buyer

broker agreements, there were also some cleanup items.

The defined term property was repositioned in the first paragraph

for clarification.

And there is also a fair housing and legal statement

that was added to the signature page.

Yes.

And thank you for referencing those, Andrea.

And I do think this is important for us to discuss for a moment.

We received some feedback that there was confusion

about how the

line in the first paragraph of the buyer brokerage agreement

was to be used for purposes of defining the property.

We had some

buyer brokers who were using that line

just to refer to a specific property,

and we're concerned that they wouldn't

have a buyer

broker agreement that applies to a more general representation.

So the idea with that line is for brokers

and their clients, of course, to be able to

define the property as broadly or as narrowly as they would like.

And we tried to clarify that with a few tweaks to the language.

But, you know, the concept is that you can insert a specific address

and have the scope of the buyer brokers

representation apply only to one specific property,

or you could refer to all residential property

in a given city or county

or all residential property

generally or something else.

So the idea is to permit buyer brokers

and their clients to make the scope of representation,

at least in terms of the type of properties

that the buyer is considering as broad or as narrow

as they would like.

And hopefully the new language makes that a little bit clearer

and a little bit easier to follow.

Yeah, I think that'll be a real big help for our members

because I know we did get a lot of calls on that,

but I think that the update makes it much more clear

and thank you for that explanation.

I think that, I think that’ll be a big help to our members.

Okay.

And along with the updated buyer broker agreements, members

will also have access to a new buyer brokerage agreement amendment.

When is it necessary to use this new form?

Good question, Andrea.

So this goes back to the timing of the forms

release for these new buyer broker agreements.

Again, our hope is that by releasing these forms

now on July 22nd,

there will be sufficient time for buyer brokers

to retire the February forms, let those sort of work

their way out of the system and migrate to this

new version of the form for the buyer broker agreements

prior to the September 16 deadline.

However, if buyer brokers and their clients

still have active buyer brokerage agreements in circulation

on September 16 using the February version of the form,

so the legacy form, then those would need to be amended

in order to comply with the NAR settlement agreement,

which again says that any buyer broker

showing properties listed in the REIN MLS

must have a buyer broker agreement

compliant with the NAR settlement agreement.

So if you've got an active legacy

buyer broker agreement on that date on September 16,

the new Buyer broker agreement amendment

is going to provide a mechanism for you to make that

a legacy buyer broker agreement compliant

without having to completely terminate

and enter into a new buyer broker agreement.

Yeah.

So it'll be very important that everyone keep track

of the revision dates on your REIN Buyer brokerage agreements.

Like Brandon said, if you have the February version

come September, you definitely want to amend it with this new form.

So beginning July 22nd, these three updated buyer

brokerage agreements and the new buyer brokerage agreement

amendment will be available in Instanet and on REINMLS.com.

Brandon and I have done a presentation

with red line changes so that you'll have access to that.

A more in-depth

look at these changes to the buyer broker agreements,

and those will be available on REINMLS.com.

And so, you know, you have those resources available to you

ahead of the July 22nd release date and even moving forward

so that you are aware of these changes

and how you need to implement them.

Brandon, Do you have anything else that you would like to add?

Maybe just one other note for our members, Andrea.

I know that we have been talking specifically

about the REIN buyer broker agreements today,

but we also understand that many of our members

have their own form of buyer broker agreements that they use

and they do not use the REIN form.

And that's perfectly fine to, you know, the REIN buyer broker

agreements are provided as a service and a convenience to

REIN’s members,

but by no

means are REIN members or anyone for that matter

required to use the REIN form of buyer broker agreement.

You know, if members have another form that they like or,

you know, negotiate

something else with their clients, that is perfectly fine.

But what I do want to flag

and there will certainly be more information about this

with the upcoming rules

changes that I know have been flagged for REIN’s members,

is that even for brokers who are using their own

non REIN form of buyer brokerage agreement,

it still needs to comply with those basic fundamental tenants

set forth in the NAR settlement agreement

in order to be compliant with the REIN rules going forward.

So we just ask that members who are using their own forms

keep that in mind.

Yes.

Thank you, Brandon. Thank you for pointing that out.

And thank all of you for listening as always,

I really appreciate you taking the time to listen and stay informed.

And if you have any suggestions for SMAC or PMAC

please submit those too SMAC@reininc.com

and we'll make sure that those suggestions

get on an upcoming meeting agenda.

And be sure to check out REINMLS.com

for more information,

including, like I said, redlines of all of the changes

discussed here today

and an in-depth video presentation with Brandon again

going over these changes to the buyer brokerage agreement.

And if you've missed any of the previous episodes of REINCheck,

I do invite you to go to REINMLS.com to take a listen

and make sure you subscribe

so that you get

future episodes delivered directly to you when they are released.

Thank you and have a great rest of your day.

You've been listening to REINCheck with Andrea Rice.

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