January 14th, 2019 at 10:59 am

Multiple Choice Question: We know that, under a new 2019 law, a buyer’s agent is no longer required to give an Agency Disclosure Statement (AD) to the seller. But we are the buyer’s agent in a For Sale By Owner (FSBO) situation, where the seller has no listing agent. Are we required to provide the FSBO seller with an Agency Disclosure Statement? Pick the best answer:

A. Yes. If there is no listing agent to give the AD to the seller, the law requires the buyer’s agent to give the AD to the seller.
B. Yes if the seller pays the buyer’s agent a commission, but otherwise no.
C. No, but giving the AD to the seller is a good idea.
D. No, because providing the AD to the seller creates an agency relationship between the buyer’s agent and seller.

Answer: Answer A is wrong. As background, starting January 1, 2019, the 3 AD requirements became only 2 requirements. A listing agent must give a seller an AD before taking a listing, and a buyer’s agent must give the buyer an AD before writing an offer. The third AD that the buyer’s agent gives to the seller to sign is no longer required, regardless of whether the seller has a listing agent.

Answer B is also wrong. The third AD is no longer required, regardless of whether the seller pays a commission to the buyer’s agent.

Answer C is the best answer. When working with a FSBO, it is prudent for a buyer’s agent to give an AD to the seller. In fact, the buyer’s agent should take matters one step further by giving the seller a C.A.R. Seller Non-Agency Agreement (SNA) clarifying that the buyer’s agent will not be acting as the FSBO’s agent. Paragraph 6A of the SNA specifically states that the buyer’s agent has attached an AD.

Answer D is wrong. Providing the AD does not create an agency relationship. The AD merely provides information about the different types of agency relationships. The actual agency relationships created or not created should be properly set forth in the Confirmation of Agency in paragraph 2 of the Residential Purchase Agreement.

-Thank you to Nicki Marcellino (La Jolla Manager) for suggesting this week’s legal tip.

Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of January 14, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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