Real Estate Disclosures
Learning Objectives: What disclosures are necessary?
What types of forms are used?
There are several disclosure forms used in real estate transactions. Here are some of the most common disclosures used; however, there may be additional requirements based on issues common to your area. For instance, in Northern Arizona a disclosure form for septic tanks might be commonly used, but infrequently used in the metropolitan Phoenix area. Check with your local Board of Realtors for other disclosure forms. The following forms are written and approved by the Arizona Association of Realtors (AAR).
AAR Real Estate Agency Disclosure and Election:
The agency disclosure form is used by real estate agents and signed by buyers and sellers for the purpose of electing broker representation. Before a buyer or a seller enters into a discussion with a real estate broker or licensee affiliated with a broker, the buyer and the seller should understand what type of agency relationship or representation they will have with the broker in the transaction. This form discusses the duties of a buyer’s broker, the duties of a seller’s broker, and the duties of a broker representing both the seller and the buyer, referred to as “limited representation.” It is common for the buyers to elect that the broker represents them as the buyer’s broker (see line 34) and it is common for the sellers to elect that the broker represents them as the seller’s broker (see line 41). The buyer must then determine if he wants to see homes that are listed by the same broker, which would create a dual agency situation. The seller must also determine if he wants to have his home shown to buyers who are using the same broker, which also creates a dual agency situation. If the parties are comfortable with the possibility of a dual agency situation, the buyer would elect on line 36 to see homes that are listed by the same broker and the seller would elect on line 42 to show his home to buyers who are represented by the same broker. Either of these situations would only allow limited representation for either the buyer or the seller. Dual agency is not recommended, but it does happen from time to time. If it were to occur, the buyer and the seller would be asked to sign a dual agency disclosure agreement.
Let’s look at the form on the following page. Please note that this document is not an employment agreement.