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New Agency Disclosure Statement and Procedures
The new Agency Disclosure Statement was effective Jan. 1, 2005. This form replaced not only the previous Agency Disclosure Statement, but also the Dual Agency Disclosure Statement that was used from 1996 to 2004. The new 2005 version incorporates all of the disclosures regarding the role of the licensees with whom the buyers and sellers are working, including whether they are acting as dual agents.
Providing the form to the buyer
Licensees working directly with a buyer, whether as a buyer’s agent or the seller’s agent, must provide the buyer with the Agency Disclosure Statement no later than the time the buyer is ready to make an offer to purchase or lease property. Unlike the previous form, the new Agency Disclosure Statement is now designed to be “transaction specific.” This means the form is to be completed based upon the actual property on which the buyer is making an offer and the role(s) of the specific licensee(s) involved.
Completing the form
As explained above, the process for completing the Agency Disclosure Statement is initiated by the agent working with the buyer. The first step in completing the form is to fill in the address of the property on which the buyer is making an offer. The agent also must fill in the names of the buyer and seller. If the agent does not know the seller’s name, it can be left blank and the listing agent can fill it in upon receipt of the form.
The agent must then complete Sections I, II or III of the form depending on which situation applies in that particular transaction. Section I should be completed if the transaction involves two separate brokerages–one that represents the seller and one that represents the buyer. This is usually referred to as a “co-op” or cooperative transaction.
Section II should be completed if the transaction involves two agents who are both licensed with the same brokerage: one who is acting as the listing agent and one who is working with the buyer. Under Section II the agent should check the first box if the agents will be acting as “split agents.” This means the listing agent is representing the seller and the other agent is representing the buyer as a buyer’s agent. The second box Under Section II applies to those brokerages which have instead adopted an office policy that even though there are two different agents, both agents in this scenario will be dual agents.
Section III is to be completed if only one agent is involved in the proposed transaction. If that agent is acting as a dual agent representing both the buyer and seller, the first box under Section III should be completed. If the agent is representing only one of the two parties, the second box should be checked. If the agent is the listing agent, the box for “seller” should be marked. On the other hand, if the sole agent involved in the transaction is representing only the buyer on a “FSBO” or “for sale by owner property” the “buyer” box should be checked by the agent.
After completing the appropriate sections of the form the agent is required to ask the buyer to sign the form. Once it is signed the agent can then begin discussions with the buyer regarding the offer to purchase they wish to make and assist the buyer with that process.
Delivery of the Agency Disclosure Statement to the Seller
After the Agency Disclosure Statement has been signed by the buyer, the agent working with that buyer must deliver the form, along with the offer to purchase, to the listing agent. If there is no listing agent or the agent also has the property listed, the agent must present the form directly to the seller. In any case, the Agency Disclosure Statement must be given to the seller prior to presenting him with the offer to purchase.
Auctions are a separate matter and are addressed specifically in the license law. Licensees selling property at auction must provide the seller with their Consumer Guide before they market or show the property. At the auction, they must verbally disclose to the audience that they represent the seller. Then the auctioneer/REALTOR must provide an Agency Disclosure Statement to the successful bidder, prior to the bidder’s signing a purchase contract.
Licensees do not have to use an Agency Disclosure Statement in these situations:
- rental or leasing of residential properties, if the rental or lease agreement can be performed in 18 months or less;
- referral of a prospective buyer, tenant, seller or landlord to another licensee;
- transactions involving the sale, lease or exchange of foreign real estate;
- transactions involving the sale of a cemetery lot or a cemetery interment right.
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