When disclosure is required, and when it is not

The brokerage relationships apply to all brokerage activity, but the disclosure requirements of 475.278 apply only to residential sales (475.274; 475.278(5)(a)).

What is a residential sale?

How the notice must look

When a required disclosure is placed inside another document, such as a listing agreement, it must be in the same size type or larger as the document's other provisions and conspicuously placed. The first sentence of the required wording must be in uppercase, bold type (475.278(3)(b) and (4)(b)).

When disclosure is not required

Under 475.278(5)(b)1., the requirements do not apply when a licensee knows the buyer or seller is already represented by a single agent or a transaction broker. They also do not apply when an owner sells new residential units it built and the setting (sales office location, signs, name badges) should reasonably tell buyers that the owner's employee or single agent is acting for the owner.

Under 475.278(5)(b)2., they also do not apply to:

• nonresidential transactions;
• renting or leasing, unless an option to purchase all or part of property improved with four or fewer residential units is given;
• a bona fide open house or model home showing that does not involve eliciting confidential information, executing a contractual offer or agreement for representation, or negotiating price, terms, or conditions;
• unanticipated casual conversations that do not involve those same things;
• responding to general factual questions about properties advertised for sale;
• giving only general factual information about the licensee's or brokerage's qualifications, background, and services;
• auctions, appraisals, and dispositions of business enterprises or business opportunities (except property with four or fewer residential units).

Watch the open house and casual conversation exceptions. They end once the talk turns to confidential information, an offer, a representation agreement, or negotiating terms.

Designated sales associates

Outside a residential sale, a broker may, at the customers' request, designate sales associates to act as single agents for different customers in the same transaction (475.2755(1)). This is allowed only when the buyer and seller have assets of $1 million or more, and both must sign disclosures saying so and asking for this arrangement. Each designated sales associate owes single agent duties. A designated sales associate may share a customer's confidential information with the broker to seek advice, and the broker must keep it confidential.

Keeping the paperwork

Disclosure documents required by 475.2755 and 475.278 must be retained by the licensee in all transactions that result in a written contract to purchase and sell real property (475.5015). The same statute requires brokers to keep business records for at least 5 years.

Violating 475.2755 or 475.278, including the duties owed under them, is grounds for discipline under 475.25(1)(q).