Nevada Property Managers – Consent to Act

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32251852This topic seems to come up very frequently, in my Nevada classes. “When should I present the Consent to Act form?”

 

Although there are varying opinions on this subject, I’ll share mine. And, should your view differ, please don’t hesitate to comment on this post. Sharing information and opinions is a vital component of our success as Nevada Property Management professionals!

 

As a matter of personal/office policy, I never introduce the Consent to Act form.

It is my policy to only represent owner/landlords in my property management and leasing business. Therefore, a Consent to Act form is never needed in my practice. I’ve been told by a number of Nevada Property Managers that their broker’s policy is to present both the Duties Owed and the Consent to Act form, at the very beginning of a relationship with a client. Although I’m led to understand that’s often done, it’s not what I would consider to be a “best practice” in our industry.

 

Here’s why –

 

In Nevada, at least in the beginning of the client/agent relationship, we owe the very highest level of care to our owner/clients. That is what they expect from us, and is why they retain our services, in the first place. However, when we begin acting in the interest of two opposing parties in a real estate transaction, we are not acting in a fiduciary capacity for either one, any longer. Our duties/responsibilities to the original client are reduced, when we begin acting for both sides in a transaction. That’s what the Consent to Act form tells both parties (in a ‘softened’ way). Acting for opposing parties in any real estate transaction presents a natural conflict of interest. That’s why we have to seek specific permission of our clients, before we embark down that path.

In my view, when the two forms (Duties Owed and Consent to Act) are presented together, at the beginning of a relationship, it serves to minimize the value of the “Consent.” After all, at that moment, there really isn’t a dual representation situation in existence. So, the client is, intentionally or unintentionally, led to believe that the form is a “just in case” document.

Then, if the Consent to Act, and its meaning, are never discussed again (why would they be?), the implications and true significance of the “Consent” are given much less attention than the client/s deserve. For these reasons, I feel the Consent to Act form should only be introduced when it is actually needed – at the time the agent is seeking permission from his/her client to act as an agent for both parties in the transaction. Lastly, in reviewing the Nevada Real Estate Division’s opinion on Agency Disclosure in our state, I interpret their bulletin on the topic to be in agreement with my view.

 

As always, I encourage you to discuss this with your broker, and/or legal counsel, before changing any of your policies or procedures, as they pertain to Agency matters.

 

Please share your views! Comments are most welcome. Thanks for reading.

 

 

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7 thoughts on “Nevada Property Managers – Consent to Act

  1. Judy
    Robert Frenchu - 2 years ago

    I’d be interested to hear the reasoning behind those brokers requiring a CTA “just in case.”

    1. Judy
      Judy - 2 years ago

      Yes. I would, as well, Bob. 😉 Thanks for reading.

  2. Judy
    Forrest Barbee - 2 years ago

    I certainly agree with Judy on this and would include one more basis for doing so. When we represent a landlord under a Property Management Agreement (PMA), then we are not in an agency relationship with that party to begin with. This is well documented in NRS645.0045 and NRS645.005. The PMA is a broad based employment agreement rather than a brokerage agreement that simply does not create agency. Thus it is clear that we are working for the landlord.

    1. Judy
      Judy - 2 years ago

      Thanks for reading and commenting, Forrest. I’m a bit confused by your statements, however. In 2003, when we lobbied the Nevada Legislature to uniquely define the “Property Management Agreement,” the purpose of the distinct definition was to acknowledge the mutually-anticipated long-term and ongoing relationship between the property owner and the property manager. In other words, the new definition allowed us to have Property Management Agreements that “automatically renew” from term to term. As you know, a brokerage agreement cannot automatically renew. Neither in testimony, nor in the language of the 2003 statute, did the Legislature address the matter of “Agency.” I believe it can be argued that the PMA does indeed create an agency relationship, depending on the specific language of the PMA.

  3. Judy
    Forrest Barbee - 2 years ago

    Yes, that was the case until NRS645 was modified by SB139 during the 2003 session.

    NRS 645.0045  “Agency” defined.

    1.  “Agency” means a relationship between a principal and an agent arising out of a brokerage agreement whereby the agent is engaged to do certain acts on behalf of the principal in dealings with a third party.

    2.  The term does not include a relationship arising solely from negotiations or communications with a client of another broker with the written permission of the broker in accordance with the provisions of subsection 2 of NRS 645.635.

    (Added to NRS by 2007, 1787)

    NRS 645.005  “Brokerage agreement” defined.  “Brokerage agreement” means an oral or written contract between a client and a broker in which the broker agrees to accept valuable consideration from the client or another person for assisting, soliciting or negotiating the sale, purchase, option, rental or lease of real property, or the sale, exchange, option or purchase of a business. The term does not include a property management agreement.

    (Added to NRS by 1995, 2072; A 2003, 932; 2005, 648)

    1. Judy
      Judy - 2 years ago

      Yes. And, I maintain that the definition of “brokerage agreement” was changed in order to allow for a separate definition of “property management agreement,” thereby permitting “automatic renewal.” It was in no way intended to set a PMA apart as an agreement that did NOT create an agency relationship. That said, I see your point, and I’ll agree that the law could better reflect these aspects. However, I’m very concerned that we be careful when we describe these relationships and contracts – a property manager, under a PMA, is most certainly an agent of the landlord, unless the agreement specifically states otherwise, and the manager’s actions demonstrate otherwise. Agreed?

  4. Judy
    Forrest Barbee - 2 years ago

    Agreed? Absolutely!!

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