TITLE 24

Professions and Occupations

CHAPTER 29. REAL ESTATE SERVICES, BROKERS, ASSOCIATE BROKERS AND SALESPERSONS

Subchapter II. Business Relationships


This subchapter applies to licensees in their business relationships with customers and clients for all types of real estate services whether they are sales, leases, exchanges, management of real estate for others, or real estate counseling conducted by licensees.

75 Del. Laws, c. 277, § 6; 78 Del. Laws, c. 166, § 1.;

(a) The fact or suspicion that a property might be or is psychologically impacted is not a material fact that must be disclosed in a real property transaction.

(b) No cause of action shall arise against an owner or landlord of real property or a licensee for failure to inquire about, make a disclosure about or release information about the fact or suspicion that such property is psychologically impacted.

(c) Except as stated in subsection (d) of this section if a customer or client makes a specific written request to the owner, landlord or licensee about the psychological impacts regarding a specific property, the owner, landlord or licensee shall answer the questions truthfully, to the best of such owner's, landlord's or licensee's knowledge. The licensee shall have no duty to inquire about the psychological impacts regarding a specific property unless a customer or client, in writing, specifically requests the licensee to ask the owner or landlord for such information.

(d) The owner, landlord or licensee shall not make any disclosure concerning those psychological impacts of HIV, AIDS, or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place even if a customer or client specifically asks about such psychological impacts.

68 Del. Laws, c. 154, § 1; 71 Del. Laws, c. 103, § 4; 78 Del. Laws, c. 166, § 1.;

Entering a name and email 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 customer may acknowledge receipt of it electronically. However, an exclusive business relationship or obligation for the customer or client to pay any compensation may only be created by a written brokerage agreement signed by the customer or client 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; 78 Del. Laws, c. 166, § 1.;

Licensees do not have a duty to conduct an independent investigation of the customer's or client's financial condition and do not have a duty to independently verify the accuracy or completeness of financial statements made by the customer or client 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; 78 Del. Laws, c. 166, § 1.;

(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 licensee 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 one 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 entitled 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 sub-agent 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 licensee or entity of licensee. — All compensation relating to a real estate services transaction to be paid to a licensee shall be paid through the broker or brokerage organization. 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 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 licensee paid by the broker or 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 licensee. Nothing in this chapter shall authorize unlicensed personal assistants, independent contractors, or employees to engage in real estate services activities which by statute or regulation of the Commission must be performed by a licensee.

75 Del. Laws, c. 277, § 6; 78 Del. Laws, c. 166, § 1.;

A competitive market analysis is not an appraisal. A licensee may perform a competitive market analysis as part of providing real estate services. However, a licensee shall not perform a competitive market analysis for the mortgagee on a property that is the subject of a signed agreement of sale. A competitive market analysis as permitted under this chapter shall meet the following criteria:

(1) A competitive market analysis shall only be prepared for the following purposes:

a. An existing or potential seller or owner for the purpose of listing a property for sale or lease; or

b. An existing or potential buyer or tenant for the purpose of purchasing or leasing a property for sale or lease;

(2) The following disclosure shall appear in at least a 12-point bold face type font and located immediately following the estimated market price:

"Notwithstanding any language to the contrary contained herein, this Competitive Market Analysis is NOT an appraisal of the market value for property and is not intended to be used for any legal purpose including approval of a mortgage loan, modification of a mortgage loan, divorce/property separation, estate settlement, bankruptcy proceedings or any other purpose where real estate value is needed. If an appraisal is desired, the services of a licensed or certified appraiser must be obtained."

(3) The competitive market analysis shall comply with the content requirements as provided in the rules and regulations.

78 Del. Laws, c. 166, § 1.;

(a) For transactions where the consumer hires a broker as a common law agent, and the broker agrees to become the consumer's common law agent, the common law of agency applies to the extent it is not inconsistent with applicable provisions of this chapter.

(b) 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.

(c) Common law agency disclosure.

(1) All licensees in a common law agency relationship must disclose, in writing, whom they represent. This disclosure shall be made to all parties to a transaction who the licensee does not represent but with whom the licensee has substantive contact, such as prospective sellers, lessors, buyers and lessees.

(2) This disclosure referenced in subsection (a) of this section shall be made at the first substantive contact between the licensee and the person the licensee does not represent. A listing broker who is not also the selling Broker and who has no substantive contact with the prospective buyer or lessee, need not make any agency disclosure to the prospective buyer or lessee.

(3) The Commission may adopt rules and regulations to prescribe the form of disclosure to be used by licensees or minimum criteria for the form of disclosure.

(4) Licensees shall not function in the capacity of a common law agent for transactions concerning a 1-to-4 family residential property unless they have established that relationship in writing and the policy of the broker is to represent only the seller or buyer as a single agent for each transaction and never as a dual agent.

68 Del. Laws, c. 166, § 1; 71 Del. Laws, c. 103, § 4; 75 Del. Laws, c. 277, §§ 1, 2, 6; 78 Del. Laws, c. 166, § 1.;

(a) The common law of agency relative to brokerage relationships in real estate services transactions established pursuant to this chapter is expressly abrogated for any licensee functioning as a broker, associate broker, or salesperson, licensee owner, or brokerage organization as defined in this chapter as a statutory agent. The remainder of this subchapter is intended to occupy completely the field of law relative to brokerage relationships for those real estate services transactions with the licensee or licensee's functioning as statutory agents. For those areas where the public, licensees, regulators, or courts need further guidance as to the conduct of statutory agents, customers and clients, the law governing independent contractor relationships shall apply to the extent it is not inconsistent with the provisions of this chapter.

(b) 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. This section through § 2938 of this title shall be construed as rules of conduct describing how a licensee works for clients, works with customers, or interacts with the general public as a statutory agent in the capacity of an independent contractor and not as a common law agent.

(c) Presumed statutory agency.

(1) For properties marketed for sale of 1-to-4 family residences or single lot sales of land intended for a 1-to-4 family residence:

a. The licensee working for the buyer is presumed to be a statutory agent representing the buyer;

b. A licensee working for the seller is presumed to be a statutory agent representing the seller; and

c. A licensee working for both buyer and seller is presumed to be a statutory agent representing both parties as a dual agent.

(2) For new construction onsite sales offices for 1-to-4 family residences or single lot sales of land intended for a 1-to-4 family residence, the onsite licensee shall be presumed to be a statutory agent representing the builder or seller.

(3) The presumption of agency may be rebutted by the consumer signing a consumer information statement establishing a different agency relationship.

78 Del. Laws, c. 166, § 1.;

(a) Commencement of duties for a statutory agent. — The duties of confidentiality as required by § 2936(c) of this title begin upon first contact between a licensee and the customer. The other statutory duties between a licensee and client as required by this subchapter begin upon the earlier of:

(1) The first scheduled appointment;

(2) The first showing of a property;

(3) Making an offering; or

(4) Otherwise working for the client;

unless a CIS is signed indicating there is no agency relationship. For transactions exempt from providing the CIS, the duties of the agent commence when the parties form an agency relationship.

(b) Duties of a statutory agent after termination. — A licensee and brokerage organization 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 the information provided by the customer or client during the course of the relationship that may reasonably be expected to have a negative impact on the customer or client's real estate activity unless:

a. The customer or 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 or radon disclosure or any other statutorily required form, is required by law;

c. The information is made public or becomes public by the words or conduct of the customer or client to whom the information pertains or from a source other than the licensee or brokerage organization; or

d. Disclosure is necessary to defend the licensee or brokerage organization 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; 78 Del. Laws, c. 166, § 1.;

(a) Licensees shall cooperate with all other licensees involved in a transaction except when cooperation is not in the customer's or client's best interest. The obligation to cooperate does not include any obligation to share commissions or to otherwise compensate another licensee.

(b) In order to cooperate, licensees shall be reasonably available when requested by their customer or client to:

(1) Accept delivery of and present to the customer or client offers and counteroffers to buy, sell, or lease the customer's or client's property, or the property the customer or client seeks to purchase or lease;

(2) Assist the customer or client 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 customer's or client's questions relating to the offers, counteroffers, notices, negotiations, and contingencies; and

(4) Hold the escrow deposit.

(c) In order to cooperate, licensees shall be reasonably available when requested by a cooperating licensee to undertake the activities described in subsection (b) of this section, but only after disclosing the request to their customer or client and receiving written authorization to undertake the requested activity. If the customer or client fails to authorize the licensee to undertake the requested activity, the licensee shall not undertake such activity. If the broker's or brokerage organization's business model includes offering all of the services explained in the CIS, rather than having separate charges for distinct real estate services, the CIS is sufficient disclosure or 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; 78 Del. Laws, c. 166, § 1.;

(a) Unless specifically hired as a common law agent by a written brokerage agreement, a licensee is a statutory agent and not a common law agent for any party. The broker may from time to time designate 1 or more associate brokers or salespersons licensed under that broker to be the designated associate broker or associate 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 licensee 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 licensee;

(4) Advising the parties to obtain expert advice on material matters about which the licensee knows but the specifics of which are beyond the expertise of such licensee;

(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 licensee;

(9) Informing the parties that they shall not be vicariously liable for acts of other licensees;

(10) Informing the parties that notice given to the designated licensee is considered notice to their client;

(11) Informing the parties that oral or written statements made by a licensee 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 and regulations 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 licensee 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;

(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 § 2927 of this title unless required to be disclosed by § 2927 of this title; or

(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.

(d) Confidentiality exception. — For transactions of properties other than those marketed as:

(1) One-to-4 family residences; or

(2) Single family lots of land intended for 1-to-4 family residence;

designated agents who are not dual agents are exempt from subsection (c) of this section; instead, a duty of confidentiality by the agent to the client shall apply after a client relationship is formed.

(e) Actions permitted by agents. — An agent may do the following without breaching any obligation, duty, or responsibility to a customer or client:

(1) List and advertise competing properties for sale or lease;

(2) Show customers or clients alternative properties not owned by their broker's other clients;

(3) Show properties in which 1 customer or client is interested to their other customers or clients;

(4) Present offers on the same property for more than 1 customer or client:

(5) 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 customer or client retaining the authority to decide what to do with this information;

(6) Assist buyers and sellers in preparing offers and counteroffers, providing that 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 customer or client;

(7) Develop negotiating strategies or options for how to proceed with a transaction;

(8) Perform ministerial tasks;

(9) Serve as a single agent, sub-agent, or 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;

(10) Cooperate with other licensees; however, for 1-to-4 family residences or single family lots of land intended for 1-to-4 family residences they shall not engage any common law subagents from other brokers or brokerage organizations;

(11) Disclose information concerning a transaction among the broker, designated associate broker(s) or designated salesperson(s), and office staff working for the brokerage organization on that transaction;

(12) 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.

(f) No imputed knowledge. — There is no imputation of knowledge or information by operation of law among or between the customer, client, broker, associate broker, salesperson, brokerage organization and other licensees or persons within a brokerage organization.

(g) 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 associate broker(s) or salesperson(s) shall also be considered effective notice to the client of that associate broker or salesperson. Notice to the broker is not considered notice to the designated associate broker(s), designated salesperson(s), or client. Notice only to the designated associate broker or salesperson is not considered notice to the broker, or the rest of the brokerage organization.

75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, §§ 5-7; 78 Del. Laws, c. 166, § 1.;

(a) A customer or client shall not be liable for a wrongful act, error, omission, or misrepresentation of the licensee except to the extent the customer or client had actual knowledge of the wrongful act, error, omission, or misrepresentation.

(b) A licensee shall not be liable for a wrongful act, error, omission, or misrepresentation of the customer or client except to the extent the licensee 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 licensee under this chapter, or the rules promulgated hereunder.

(d) This chapter does not otherwise limit the liability of a broker, for an act, error, or omission of a licensee in the brokerage organization. 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 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; 78 Del. Laws, c. 166, § 1.;

(a) The Commission shall establish by rule and 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 licensee is permitted or prohibited from doing as provided by §§ 2935 and 2936 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 earlier of:

(1) The first scheduled appointment;

(2) The first showing of a property; or

(3) Making an offer;

unless the consumer has already been given the CIS by another licensee. 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. The CIS must be signed by the customer or client prior to signing an agreement of sale, listing agreement or any other brokerage agreement, unless otherwise exempt from providing a CIS.

(c) The CIS shall be available to the consumer at open houses, but does not need to be personally presented by the licensee 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) The duties of confidentiality as required by § 2936(c) of this title begin upon the first contact between a licensee and the customer. The other statutory duties between a licensee and client as required by this subchapter begin upon the earlier of:

(1) The first scheduled appointment;

(2) The first showing of a property;

(3) Making an offer; or

(4) Otherwise working for the client;

unless a CIS is signed indicating there is no agency relationship. 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 § 2936(c) of this title and the rest of this chapter still apply to those leases. The broker may still choose to provide the CIS as a matter of brokerage organization 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 (Title 24 of the Delaware Code, Chapter 29) 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 no later than the earlier of:

(1) The first scheduled appointment;

(2) The first showing of a property; or

(3) Making an offer,

but does not need to be signed until the potential tenant decides to complete a rental application or the signing of a lease.

75 Del. Laws, c. 277, § 6; 76 Del. Laws, c. 258, §§ 3, 4, 10; 78 Del. Laws, c. 166, § 1.;