What you should know about Agency Disclosure

A disclosure package in San Francisco almost always starts with a “Disclosure Regarding Real Estate Agency Relationship” form like the one pictured in this article. It’s a document that is filled with small type and lots of legal language – in other words, it is a document that tends to make the eyes immediately gloss over, which is unfortunate because of the importance of the agency relationship.

A typical agency relationship in the purchase or sale of a home in San Francisco (or California) follows the three following steps:

  1. Disclosure – this consists of presenting a buyer or seller with information about the three types of agency relationships in California Real Estate – Seller Agency, Buyer Agency, and Dual Agency. It is important to note that disclosure does not create an agency relationship. When a buyer or seller signs this form, they aren’t agreeing to any particular type of agency relationship – they are simply acknowledging that they have been provided with the information about the various types of agency relationships and the differences in each of the three types of agency.
  2. Election – There isn’t usually a form for this, but I’m sure one exists somewhere. Election of agency is typically created through the actions of the parties. In other words, if I tell you I’m going to write an offer with you after you’ve disclosed the various types of agency to me, my actions demonstrate that I have elected to work with you as a (fill in the blank with the appropriate form of agency).
  3. Confirmation – In San Francisco, this final step typically happens in the purchase contract where there is a paragraph that spells out who the brokerages are that are involved in a transaction, and in what capacity they represent the buyer and seller.
Agency Disclosure Picture
A typical Agency Disclosure form in San Francisco

Agency is one of the most important topics in real estate that gets far less attention than it deserves. That said, we’ve written about agency in the past, including the following three articles:

 

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