San Diego Coastal Real Estate Resource

Revised Disclosure Regarding Real Estate Agency Realtionships

by Jeffrey on November 17, 2009

in Agency, Disclosures & Contracts, Real Estate

C.A.R. revises Agency Disclosure Form AD

One of the first forms that you should see when working with a real estate agent is a Disclosure Regarding Real Estate Agency Relationship produced by the California Association of REALTORS® (CAR). This form has been revised in November 2009 making the process of proper delivery easier to understand.

The AD basically outlines the 3 types of agency relationships that you can have with a real estate agent in California. This agency relationship is then confirmed in the listing agreement or purchase contract when a property is listed for sale or an offer is written to purchase real estate. You will want to know what obligations the agent you are working with has to you and other parties in the transaction. As always, RealtyV2 and Jeffrey Douglass only practice single agency, we will never represent both a buyer and seller in a transaction as a dual agent.

Most notable among the forms being released is a revised Disclosure Regarding Real Estate Agency Relationships (Form AD). The revised AD form aims at ending the confusion surrounding the form by allowing a buyer’s agent to use just one form for both the seller and buyer to sign. REALTORS® may now handle the delivery of the AD form in either of two ways:

Alternative A: Agents may continue the existing practice of generating three AD forms in a typical transaction. The first AD form is generally signed by the listing agent and seller before entering into a listing agreement. Absent dual agency, the second AD form is generally signed by a buyer’s agent and buyer before writing an offer. The third AD form is generally signed by the buyer’s agent and seller. An AD form signed by the buyer’s agent and seller does not create an agency relationship between the buyer’s agent and seller because the AD form is merely an information sheet. The actual confirmation of agency is stated separately in paragraph 27C of the C.A.R. Residential Purchase Agreement (RPA).

Alternative B: The procedure for Alternative B is stated in the explanation box at the bottom of the newly revised AD (revised 11/09). Agents will still prepare the first and second AD forms stated in Alternative A. The buyer’s agent, however, may now deliver to the seller the second AD form signed by the buyer’s agent and buyer. The seller may sign acknowledgement of receipt of that AD form on the signature line in the explanation box. No third AD form is needed under Alternative B.

Hopefully this will help real estate agents that don’t understand the importance of Agency Disclosure. My guess is problems will continue to exist with Agency Disclosures and Agency Confirmation delivered much later in the transaction. I recently wrote an article on how many lawsuits are a result of disclosure not being done early enough in the relationship.

View a copy of the revised form here or visit our real estate agency category for more information.

Photo courtesy Flicker

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