Disclosure of the Brokerage Agency Policy…
The Consumer Guide to Agency Relationships
In 2005 new provisions regarding the content and timing for providing a brokerage’s agency policy become effective. Beginning on that date the brokerage’s agency policy became the sole vehicle for delivering information regarding agency to buyers and sellers at first contact. The Agency Disclosure Statement is no longer required at that stage.
Under the law, brokerages must develop their own brokerage policy on agency that meets certain statutory guidelines. The policy can be in pamphlet or brochure format. The Division of Real Estate and Professional Licensing adopted rules that specify what must be contained in this policy. To assure uniformity, the Division rules require that the policy that brokers develop must be entitled “Consumer Guide to Agency Relationships.” Further, this title must be in a font no smaller than 14 point.
The following must be included by brokers in this “Consumer Guide:”
- The brokerage name (company logos, franchise names and logos and the REALTOR or other trade group insignia may be included. The names of agents, teams or unlicensed persons may not.)
- An explanation of the permissible types of agency relationships;
- The potential for other licensees within the same brokerage to act as a subagent, dual agent, buyer’s agent or seller’s agent on the same transaction;
- The fact that a buyer’s agent represents the buyer’s interests even if the seller’s agent or seller compensates the buyer’s agent;
- The possibility of a licensee acting as dual agent, along with the client’s options and consequences if that situation occurs. Options might include terminating the agency relationship and seeking representation from another licensee.
- The brokerage’s company policy regarding cooperation with other licensees acting as subagents, seller’s agents or purchaser’s agents. The policy must state whether the broker offers compensation to those agents or will seek compensation from those agents;
- The fair housing logo and statement. The fair housing language must be no smaller than 9 point font;
- A statement that the licensee is required to provide the consumer with the policy; and;
- A place for the consumer to sign acknowledging receipt of the Guide.
Because these disclosures involve a brokerage’s own policies, there is no mandated form to make these disclosures. Instead, each broker must choose how he or she wants to make these disclosures and develop their own disclosure piece.
As stated above, brokers may choose the format for this document. For example, brokers could opt to provide their policy as a pamphlet or as a traditional 8 ½ x 11 inch document. Except for the fair housing statement, the text must be in a font no smaller than 11 point. Whatever format is chosen, however, the consumer must be asked to sign, acknowledging receipt of that document.
The acknowledgment can be on a separate document, but cannot be included in any other contract the buyer or seller signs such as a listing agreement, buyer agency agreement or purchase contact.
If the consumer will not sign, that fact must be noted, along with the date the presentation was made.
The “Consumer Guide to Agency Relationships” must be given to a seller by the listing agent before the property is shown or marketed. The most convenient way to comply with requirement is for it to be included in an agent’s listing packet.
With respect to buyers, the licensee is required to provide them with the “Consumer Guide to Agency Relationships” before the earliest of the following events:
- Pre-qualifying the buyer
- Requesting specific financial information
- Showing property (other than at an open house)
- Discussing the making of an offer
- Submitting an offer
- Whichever of the above events occurs first will trigger the licensee’s obligation to provide the Guide to the buyer.
NOTE: Effective Sept. 29, 2013 the “Consumer Guide to Agency Relationships” will no longer be required on commercial real estate transactions. Instead the Consumer Guide is only required in the following situations:
- The sale or lease of vacant land (regardless of how it is zoned);
- The sale of a parcel of real estate containing one to four residential units;
- The leasing of residential premises if the rental or lease agreement is for a term of more than 18 months.
Under Ohio License Law, a Consumer Guide is not required in a referral situation or if another licensee in the same brokerage already provided it to the buyer/seller.
For sample policies that comply with the above requirements, click here. Brokers will be able to choose from several versions depending on the agency policy they have chosen for their company (i.e., split agency, dual agency, exclusive buyer agency only, etc.)
Samples Consumer Guide to Agency Relationships
Below are sample versions of the “Consumer Guide to Agency Relationshps” that were developed jointly by the Ohio Division of Real Estate & Professional Licensing and the Ohio Association of REALTORS.
The version you choose should correlate with the agency policy chosen by your brokerage. In Ohio, there are basically five different ways most brokerages commonly practice. Samples were developed for each practice.
For each of these five options, two samples of the “Guides” were developed. The text of each is identical, the only difference is the format. One is a traditional 8 1/2″ x 11″, 2-sided version; and the other is in a tri-fold pamphlet version. Each of these “Guides” contain a place for the buyer or seller to sign acknowledging their receipt of the document.
All PDF documents are INTERACTIVE. Simply type your brokerage name in the grey box under the pamphlet title. Once you have done so all other areas will automatically be filled in with your brokerage name.
Remember, you must have the full version of Adobe Acrobat to save your PDF documents. If you only have Adobe Reader (free download at www.adobe.com) you’ll be able to complete the form and print, but not save the information.
In the Word documents where the sample refers to “Brokerage,” your brokerage name must be inserted. The fonts used must meet the minimum statutory requirement (i.e. minimum of 11 pt. text size and 9 pt. text for the Fair Housing information; the brochure title must be no smaller than 14 pt. type size).
Important Note: The law requires that the body copy of the Consumer Guides appear in a minimum 11 point type size (except the Fair Housing information which must be no smaller than 9 point type size.)
If you have problems entering your brokerage name or printing the PDF document, please do not call the Legal Assistance Hotline. Contact Nikki Gasbarro at mailto:email@example.com call 614.228.6675 for assistance.
These documents are examples of a “Consumer Guide to Agency Relationships” that comply with Ohio license law. Brokers are not required to use these versions. They can draft their own “Consumer Guide” if they wish, as long as it complies with the criteria provided in the license law.
Below is a summary of each of the five policy options and the appropriate “Consumer Guide” for each policy.
Split Agency: Your brokerage lists property as a seller’s agent and acts as a buyer’s agent on other companies’ listings. On in-company transactions where two agents are involved, your agents represent their separate clients. If the same agent is both the listing and selling agent or a management level licensee is involved, they must act as a dual agent. Brokerages choosing this policy must be confident they can protect confidential information within the office.
Dual Agency on all in-company transactions: Like the Split Agency policy above, your brokerage represents sellers and buyers, except your agents are always dual agents on in-company transactions. “Split” agency is not practiced by choice and agency agreements provide for this. This policy will work for brokerages that do not believe they can put practices into place within the office to protect confidential information.
Exclusive Buyer Agency only: Under this policy, your brokerage only represents buyers and does not take listings, practice subagency or dual agency.
Exclusive Seller Agency only: Under this policy, your brokerage lists property for sellers and acts as a subagent of the seller on other broker’s listings. Buyers are treated as customers. Dual agency is not practiced.
Represent both buyers and sellers, never both as dual agents: Under this policy, your brokerage lists property, represents buyers and practices split agency. However, if the buyer client wants to purchase property listed with his agent, the agency relationship with the buyer is terminated and the agent represents only the seller. This policy is chosen by brokers who do not feel comfortable with dual agency.