Fact Pattern: You have been showing properties to a buyer under a signed Buyer Representation Agreement (BRBC). As it turns out, the buyer only wants you to help her write extremely low-ball offers that all end up going nowhere. You’ve tried your best to encourage the buyer to change her approach, but to no avail.

Multiple Choice Question: Can you terminate your agency relationship with the buyer? Pick the best answer:

A. Yes, by mutual agreement only.
B. Yes.
C. No.
D. It depends on how the Cancellation paragraph in the BRBC was completed.

Answer: Answer A is not the best answer to the question posed. However, a mutual cancellation of the BRBC can be the best approach from a liability standpoint, as further discussed below.

Answer B is the correct answer, and Answer C is wrong. The law will never force you to represent someone you do not want to represent. To require you to do that would be a form of involuntary servitude that was abolished along with the passage of the 13th Amendment to the U.S. Constitution.

However, regardless of whether you are legally entitled to terminate your agency relationship, you should be mindful of any potential liability before cancelling your buyer representation agreement. If, for example, you unilaterally drop your problematic client without any warning, she can easily get upset and try to argue that you somehow breached your fiduciary duty to her by bailing out on her when she needed you the most. Granted she might not have a very strong argument against you, depending on the circumstances. But you may nevertheless be able to avoid that type of argument altogether by doing a cancellation of the entire BRBC by mutual agreement.

You can use C.A.R.’s standard-form Cancellation of Buyer Representation (COBR) for cancelling a buyer representation agreement. Use the signature box at the bottom of the first page to do a cancellation by mutual agreement.

Answer D is wrong. It’s true that paragraph 4C of the BRBC addresses whether the agreement can be cancelled unilaterally or by mutual agreement. But Answer D is wrong because the Multiple Choice question is whether the agent can cancel the agency relationship (as protected by the U.S. Constitution), and not whether the agent can cancel the BRBC agreement.

A BRBC is a 2-part agreement. It is both an agency agreement that be cancelled at any time, and it’s also a compensation agreement that can only be cancelled pursuant to paragraph 4C of the BRBC. If the agent in our situation wants to cancel the agency relationship, we can safely assume that the agent is also willing to voluntarily relinquish his or her right to compensation under the BRBC.

-Thank You to Dean Stalter (Broker of Record) for suggesting this week’s legal tip!

Copyright© 2023 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of March 13, 2023. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.