Disclosure Regarding Real Estate Agency Relationships

Jul 2, 2024

Disclosure Regarding Real Estate Agency Relationships

Introduction

  • Presenter: Christine, mentor for Realty One Group Southwest.
  • Topic: Disclosure regarding real estate agency relationships.
  • Objective: Understand the form and how to explain it to prospective sellers.
  • Importance: Clarify duties and responsibilities of real estate agents, avoid misconceptions.

Agency Disclosure Mandate

  • Reason for mandate: Public confusion about agents' duties led California legislators to require a disclosure form.
  • Form: CA-R Form AED (Agency Disclosure Form).
  • Consequences of not following: Loss of license, potential legal claims.

Purpose and Uses

  • Training: How to use the agency disclosure form correctly.
  • Fundamental requirement for California real estate licensees.
  • Roles: Sellers' agents, buyers' agents, dual agents.

Form Details

  • When Required: Transactions involving sale, exchange, or lease (>1 year) of 1-4 residential units or a mobile home.
  • Form Structure: One double-sided page.
    • Front: Completed and signed by agent and clients.
    • Back: Contains portions of California Civil Code; must be furnished to clients.
  • Completion Timing: From the outset of relationship, or before signing other documents.

Agency Relationships

  • Types:
    • Sellers' Agent
    • Buyers' Agent
    • Dual Agent
  • Duties to Clients:
    • Fiduciary duty of care, integrity, honesty, and loyalty.
    • Diligent exercise of skill and care, honest and fair dealings, disclose material facts.

Disclosure Obligations

  • Material Facts: Disclose anything affecting value or desirability not known to parties.
  • Confidentiality: Do not disclose confidential information that doesn't involve agency duties.

Dual Agency

  • Definition: Representing both buyer and seller.
  • Legality: Requires informed consent from both parties.
  • Risks: Undisclosed dual agency can lead to lawsuits, license loss, and commission refunds.
  • Marketing Limitations: Discuss potential dual agency situations in advance.
  • Negotiation Restrictions: Do not disclose confidential negotiation information.

Professional Limits

  • Scope of Advice: Real estate matters only, not tax or legal advice.
  • Consult professionals for non-real estate matters.

Practical Considerations

  • Signatures: Obtaining signatures on the agency form is non-binding but indicates possible willingness to work together.
  • Client Expectations: Form ensures clients know what to expect from agents.
  • Multiple Agents: Form use can reveal if clients are working with multiple agents.

Conclusion

  • Nature of Form: Disclosure, not a contract.
  • Signing Significance: Indicates receipt, not agency relationship commitment.
  • Professional Use: Can be used as a marketing tool.
  • Final Advice: Handle the process professionally, utilize the form to establish clear expectations.

Contact: For questions or concerns, email or call Christine.