Question:
When must a licensee disclose a brokerage relationship?
Answer:
Pursuant to Virginia Code §54.1-2138, a licensee must disclose any brokerage relationship that licensee has with another party to the transaction upon having a substantive discussion about a specific property or properties with an actual or prospective buyer/seller/landlord/tenant who is not the client of the licensee and who is not represented by another licensee. The disclosure shall be made in writing at the earliest practical time, but in no event later than the time when specific real estate assistance is first provided. The disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. NVAR form K1207 “Disclosure of Brokerage Relationship” meets all of the legally required notice requirements for formatting, and need only be completed with client and brokerage specific information to comply with the disclosure requirements.
Example 1:
Listing Agent is affiliated with ABC Brokerage and has entered into a brokerage relationship with Seller evidenced by a ratified listing agreement. Listing Agent holds an open house at Seller’s property. Mr. and Mrs. Buyer attend the open house, express that they are actively seeking to purchase a home, and ask several substantive questions of Listing Agent about the property. Listing Agent asks if Mr. and Mrs. Buyer are represented by an agent and is told that they do not have a brokerage relationship with another agent. Listing Agent must stop and provide Mr. and Mrs. Buyer with written disclosure of her brokerage relationship with Seller. In order to be prepared to make proper disclosure, Listing Agent should be equipped with completed copies of NVAR Form K1207 “Disclosure of Brokerage Relationship,” indicating clearly that Listing Agent represents Seller.
Example 2:
Buyer’s Agent is affiliated with XYZ Brokerage and has entered into a brokerage relationship with Buyer as evidenced by a ratified buyer/broker agreement. Buyer would like to purchase a home in a specific neighborhood where there are currently no homes listed for sale. Buyer’s Agent knocks on doors in the neighborhood with the intent of asking owners if they are interested in selling their home. Buyer’s Agent knocks on the first door and first asks if the owner is represented by an agent. The owner responds that he is not represented by an agent. Buyer’s agent must stop and provide the owner with written disclosure of her brokerage relationship with Buyer. In order to be prepared to make proper disclosure, Buyer’s Agent should be equipped with completed copies of NVAR Form K1207 “Disclosure of Brokerage Relationship,” indicating clearly that Buyer’s Agent represents Buyer.
Editor’s Note: This information was provided with input from NVAR’s Attorney Roundtable, a group of NVAR attorney members who meet bimonthly to discuss legal issues that affect Realtors®. For more information, contact NVAR General Counsel, Sarah Louppe Petcher at spetcher@nvar.com.