This article is provided for informational purposes only. Readers should consult their legal counsel when making decisions about business practices.
On June 19, 2024, Governor Landry signed Louisiana Act 690 of the 2024 Legislative Session into law. Originally titled HB366 and authored by Hon. Paula Davis (R-69) of Baton Rouge, the legislation requires all Louisiana real estate licensees to execute a written “Buyer agreement” when assisting buyers in connection with the purchase, or the submission of an offer to purchase, a home. This law becomes effective on August 19, 2024.
While there are notable similarities between the Act and the terms of the NAR settlement agreement, there are a few differences that we will identify and unpack.
But first, all should be reminded that there is not one, not two, but THREE critical dates in August to point your attention towards:
- August 15: Local implementation date for new ROAM MLS rules and required practice changes—if you are ROAM MLS Participant or NOMAR member, you must adhere to this deadline.
- August 17: National implementation deadline for NAR MLS rules and policy changes
- August 19: New state law effective date
Definitions
Now let’s turn to what constitutes a “home.” For the purposes of Act 690, a “home” is defined as a residential property consisting of 1 but not more than 4 units, which is occupied or intended to be occupied as a single-family dwelling. This definition aligns squarely, if not identically, with the NAR settlement agreement.
The Act, however, focuses heavily on defining a “buyer” as:
a person who utilizes the services of a real estate licensee in connection with the purchase, or the submission of an offer to purchase, a home, or who utilizes, or seeks to utilize, the services of a real estate licensee with the objective or purported objective or entering into a contract to purchase a home (emphasis added).
On the other hand, the NAR settlement agreement specifies what services or activities trigger the need for a buyer representation agreement, under the umbrella of providing brokerage services. Under the terms of the settlement, an MLS Participant must have an executed written agreement in place when working with a buyer, before touring a home. Working with a buyer means providing brokerage services, including, but not limited to:
- conducting research into potential properties
- arranging showings to tour a property
- performing or facilitating negotiations on behalf of the buyer, or
- presenting offers from the buyer to the seller.
It is also worth noting that pursuant to the NAR settlement terms, “touring” is defined as entering a home to show it to a buyer, virtually or in-person, at the Participant’s direction (i.e., you don’t need a buyer representation agreement to welcome potential buyers to an open house, or to provide an unrepresented buyer access to one of your listings).
Finally, and unlike the NAR provisions which require MLS Participants to have an executed buyer agreement prior to touring a home, Act 690 does not dictate when a buyer agreement must be executed between a licensee and buyer.
Disclosure, Disclosure, Disclosure
Both Act 690 and the NAR settlement require that buyer representation agreements contain compensation disclosures. The Act’s main requirement is that the agreement state the amount of buyer broker compensation or how that amount will be calculated, and a description of the services the broker will provide to the buyer.
NAR’s settlement terms go further by requiring the following:
- a specific and conspicuous disclosure of the amount or rate of compensation from any source the MLS Participant will receive, or how this amount will be determined
- that the amount or rate of compensation is “objectively ascertainable and not open-ended” (i.e., not “whatever the seller is offering”)
- a statement that the MLS Participant cannot receive compensation from any source over the amount or rate in the buyer agreement
- a conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.
Best practice indicates the use of a conspicuous statement that fees and commissions are fully negotiable and not set by law in any written agreement.
For a quick overview at-a-glance of the law compared to the settlement, you can view the Louisiana REALTORS® comparison chart here.
Tying It All Together
At the end of the day, adapting to the new normal of the post-settlement landscape requires more than adhering to the law. While a square is always a rectangle, a rectangle is not always a square. The same can be said for buyer agreements. All NAR-compliant buyer representation agreements will meet the requirements of Act 690, but compliance with state law may not always pass muster of the NAR requirements and policies (see https://www.larealtors.org/session-scoop-may-24-2024). Going “above and beyond” is part of the fabric that ties the REALTOR® family together and is evidenced in the REALTOR commitment to fair housing and ethical practice. REALTORS® have always risen above the standards imposed by law. That’s who we R.
As always, much more information is available at nomar.org/settlement, larealtors.org/nar-legal-updates, and facts.realtor.