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BOMA Victory on Behalf of Members & the CRE Ownership - Dual Agency

Tuesday, April 30, 2019   (0 Comments)
Posted by: Christine Miclat
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Dual Agency: BOMA played a major role in defeating two bills that if passed, would have drastically changed current authorized dual agency practices in Washington State. Being able to provide dual agency services to both the seller and buyer when fully disclosed and approved in writing, preserves a significant income line of business for a large number of BOMA member firms. The primary sponsors of these bills, a tenant lease representative firm, sought to impose restrictions and take away tenant choice.



Arguments BOMA made regarding proposed changes to the existing Dual Agency law in Washington State: SB 5189 – BAD FOR WASHINGTON


Why is this bill bad for Washington?

  • SB 5189 is a solution where there is no problem. Dual agency has generally operated without issue in Washington for many years. When representing both parties to a transaction, commercial real estate companies have instituted proven procedures to ensure each party is zealously represented, such as obtaining written consent from each party, assigning separate brokers to individually represent each party and establishing confidentiality walls to protect each party’s information. To our knowledge, consumers of commercial brokerage services have raised no concerns over dual agency.   
  • If a tenant firm desires to hire their own broker and retain a real estate attorney, as many do, that choice is always there. This proposed legislation would require action and costs that many tenant firms don’t need or want. 
  • Washington law already requires disclosures to consumers in commercial transactions if dual agency arises. The additional requirement proposed in SB 5189 does little to enhance understanding of dual agency but instead creates barriers to free choice and added costs to real estate transactions. Many consumers chose to use a full-service firm through dual agency to obtain the robust market data available. SB 5189 is simply a ploy by one real estate company to use the legislative process to gain a market advantage.   
  • SB 5189 is an anti-consumer legislation that would interfere with a consumer’s right to retain the broker of his or her choice. If passed, a broker representing a client would be prohibited from showing or representing the client with respect to any property listed by another broker in the broker’s company unless the client hires a lawyer to essentially sign off on the transaction. No other industry has this nonsensical requirement. This proposal would be a boon for lawyers, but it harms smaller companies and the commercial real estate sector in general.  One probable result would be that clients would miss opportunities, lose access to market knowledge, and be forced to find another broker against the client’s wishes.
  • Clients want to work with full service firms that can provide a complete array of services to meet their needs. Any one client may need real estate services to acquire new property, dispose of unwanted property, assist with construction management and provide other real estate services. Full service firms can provide all of these services that clients want under one, coordinated umbrella and our enhanced expertise can result in better outcomes for our clients. SB 5189 would essentially create a tax and likely curtail a client’s right to choose one company to provide all services, causing reduced efficiency and increasing costs.
  • Unlike a dual representation situation in other industries where there is a clear winner and loser, such as the legal industry, in commercial real estate, there is no winner or loser. Rather, commercial real estate is designed for discovery and compromise, and the role of a broker is to provide information that creates an understanding of the market to both sides of a transaction in order for both to make good business decisions. The goal is to bring parties together on a common ground.
  • Mandating legal approval of dual agency requires paying expensive legal fees which could have the practical impact of essentially banning dual agency – or at least significantly curtailing it by making it more expensive. A single agency real estate industry would increase the complexity and costs of transactions, reduce choice of properties and advisors, cause the termination or delay projects and chill corporate investment in the state, all putting jobs at risk.
  • This effort to hinder or even end dual agency is simply a self-serving ploy by one tenant/buyer-only firms to do legislatively what they can’t do successfully through market competition. A similar bill was tried in California and soundly defeated once lawmakers understood the true motivations behind it and probable sweeping impacts.
  • This proposed legislation would negatively impact the majority of companies that occupy commercial space in Washington, large and small, particularly in its largest markets. As a result, would broadly paint Washington as a “difficult” state in which to do business.
  • Washington would be the first and only state in the country to enact such a mandate.
  • SB 5189 could have the perverse impact of forcing commercial brokers to choose between representing buyers/tenants or sellers/landlords. Many brokers now offer both services, particularly in smaller markets, where there is insufficient business for brokers to offer services to just one group or the other. Some of these brokers may be forced out of the industry altogether if they can’t earn a living representing only one group. SB 5189 will cause unnecessary upheaval to the industry and cost the industry millions of dollars and could effectively deny Washingtonians the choice and expertise afforded to them under the current dual agency model.


Dual Agency Facts Sheet

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