What does a Virginia brokerage agreement have to include?
A Virginia brokerage agreement must be in writing and have a definite termination date; one that names none ends 90 days after the date of the agreement. It must state the amount of the brokerage fees and how and when they are paid, the services the licensee will provide, any other agreed terms, and whether the licensee represents the client as an agent or an independent contractor.
An agreement with no end date written in stops 90 days after its date
When the paper leaves out an end date, Virginia supplies one. A brokerage agreement that names no definite termination date does not run until someone cancels it. It ends 90 days after the date of the agreement.
C. Brokerage agreements shall be in writing and shall: 1. Have a definite termination date; however, if a brokerage agreement does not specify a definite termination date, the brokerage agreement shall terminate 90 days after the date of the brokerage agreement
Va. Code 54.1-2137 C
The same subsection opens with the first requirement of all: the agreement is in writing. The name itself is the Code's. Va. Code 54.1-2130 defines a brokerage agreement as the written agreement creating a brokerage relationship between a client and a licensee, and the short definition sits under brokerage agreement. On the seller's side the same paper usually goes by a trade name, explained under listing agreement.
Fee, payment, services, other terms and the kind of representation
Read a draft against a short list. Each item below is one Virginia requires the agreement to carry.
2. State the amount of the brokerage fees and how and when such fees are to be paid; 3. State the services to be rendered by the licensee; 4. Include such other terms of the brokerage relationship as have been agreed to by the client and the licensee
Va. Code 54.1-2137 C
- The fee's amount. Stated in the agreement, not left to be worked out later.
- How and when the fee is paid. The method and the timing are both part of the requirement.
- The services. What the licensee will actually do under the agreement.
- Other agreed terms. Anything else the client and the licensee settled belongs on the page with the rest.
- Agent or independent contractor. Va. Code 54.1-2130 says the brokerage agreement shall state whether the licensee will represent the client as an agent or an independent contractor.
The statute sets no fee figure or rate, and no term length beyond the 90-day default for an agreement with no definite termination date; each is whatever the signed paper states. One term that matters on land is what happens when the owner finds the buyer, worked through in listing and still selling to a neighbor. A valuation is a separate matter from the brokerage fee, covered in whether a valuation costs anything.
The relationship and the pay come first, and three relationships add requirements
The agreement is not the first obligation. Under Va. Code 54.1-2136, before entering any brokerage relationship, a licensee has to advise the prospective client of the kind of relationship on offer and of what the broker will be paid, including any sharing of that pay with another broker.
And under Va. Code 54.1-2137, except as that article otherwise provides, a licensee has to enter into a brokerage agreement with a prospective client before providing brokerage services. The relationship proposed can take more than one shape, and three of them carry requirements of their own:
- Dual agency, where one licensee has a brokerage relationship with both seller and buyer in the same transaction, needs written consent after written disclosure in a residential transaction, as explained under dual agency.
- Designated agency, where a principal or supervising broker assigns a licensee to represent one client while a different client in the same transaction is also represented by that broker, is a separate arrangement that also needs the written consent of all clients to the transaction, as explained under designated agency.
- A limited service agent, who will not provide one or more of the standard duties named in the Code, may act in a residential transaction only under a written agreement that says so conspicuously and lists what is and is not provided, as set out under limited service agent.
Completion, or whichever of four other endings comes first
Under Va. Code 54.1-2137, the brokerage relationship begins when a client engages a licensee to provide brokerage services. It continues until performance under the agreement is complete, or until the earliest of these four events.
- An expiration date the parties agreed to in the agreement or in an amendment to it.
- A termination both sides agree to.
- A default by any party under the terms of the agreement.
- A termination under Va. Code 54.1-2139 G, where a licensee withdraws, without liability, from representing a client who refuses to consent to a disclosed dual agency or dual representation.
So an agreement does not end only on its expiration date or at closing. Whether a particular event counts as a default, or whether a mutual termination was actually agreed, turns on the words of the signed paper, and reading them belongs to an attorney.
Two duties outlast the agreement, and the broker keeps it on file for three years
When the agreement is completed, expires or is terminated, the licensee's duties mostly end with it. Except as otherwise agreed in writing, two do not.
- Accounting. The licensee still has to account for all moneys and property relating to the brokerage relationship.
- Confidentiality. The licensee still has to keep confidential all personal and financial information received from the client during the relationship, and any other information the client asked to be kept confidential, unless the law provides otherwise or the client consents in writing to its release.
The paper outlives the relationship as well. Under 18VAC135-20-185 C 1, the principal or supervising broker must retain each brokerage agreement for three years from the date of execution, along with each disclosure and consent to dual or designated agency or representation. What a specific signed agreement obliges either side to do, before or after it ends, is a question for your attorney.
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Questions this raises
Can a brokerage agreement end before its termination date?
Yes. Under Va. Code 54.1-2137 the relationship continues until performance is complete or until the earliest of an agreed expiration date, a mutually agreed termination, a default by any party under the agreement, or a withdrawal under Va. Code 54.1-2139 G after a client refuses to consent to disclosed dual agency or dual representation. Any of the last three can come before the date on the paper. Whether an event in your situation qualifies is for an attorney to read against the signed agreement.
Does a licensee need a written agreement before helping me?
Before providing brokerage services, yes, except as Virginia's brokerage relationship article otherwise provides, and the agreement has to be in writing. Brokerage services include activities that require the licensee's professional judgment, discretion, advice or counsel. Where that line falls in a particular conversation is a question for the firm's supervising broker.
Does confidentiality end when the agreement ends?
Not for personal and financial information received from the client during the relationship, or other information the client asked to be kept confidential. Va. Code 54.1-2137 D keeps that duty after termination, expiration or completion, except as otherwise agreed in writing, and it gives way where the law provides otherwise or the client consents in writing to release. The duty to account for money and property survives as well.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 54.1-2137, commencement and termination of brokerage relationships and required terms of brokerage agreements Virginia General Assembly
- Va. Code 54.1-2130, definitions, including brokerage agreement and limited service agent Virginia General Assembly
- Va. Code 54.1-2136, disclosure of the proposed brokerage relationship and compensation Virginia General Assembly
- Va. Code 54.1-2139, dual agency or representation, including subsection G Virginia General Assembly
- Va. Code 54.1-2138.1, limited service agents Virginia General Assembly
- 18VAC135-20-185 C 1, retention of brokerage agreements and agency disclosures Virginia Real Estate Board