When is the appropriate time for a seller to the sign agency disclosure form?
By Peg Ritenour, Ohio REALTORS Vice President of Legal Services
Q: Our MLS allows the listing agent to upload certain documents such as the Residential Property Disclosure form and Lead-based Paint Disclosure when they enter a listing in the MLS. Recently some listing agents in my area have been uploading an Agency Disclosure Statement signed by the seller at the time of listing. I recently had a listing agent insist that this be the form that my buyer sign and submit with their offer to purchase. Am I required to use that form? Is it OK to use it?
A: Utilizing an agency form that the seller signed at the time of listing is not a good idea and could potentially result in a license law violation and pose other issues related to undisclosed dual agency in certain situations.
That is because under Ohio license law the Agency Disclosure Statement is required to be “transaction specific.” This means the form is to be completed identifying the actual property on which the buyer is making an offer, the names of the buyer and seller, the names of the specific licensee(s) and brokerage(s) involved in that potential transaction and the party those licensees represent in the proposed transaction. The form should contain this information when it is signed by the buyer and then subsequently, the seller. Obviously at the time of listing the only information that could be included on the Agency Disclosure form is the address, the name of the listing agent and the seller’s name. Other required information including the agency relationships would not be known at that time.
Moreover, the practice of a listing agent having the seller sign an Agency Disclosure Statement at the time of listing does not follow the agency disclosure process outlined in Ohio license law. Ohio law requires that the Agency Disclosure Statement be initiated by the agent working with the buyer. A licensee working directly with a buyer, whether as a buyer’s agent or the listing agent, must complete the Agency Disclosure Statement with the information described above and provide it to the buyer no later than the time the buyer is ready to make an offer to purchase or lease property.
After the Agency Disclosure Statement has been signed by the buyer, the buyer’s agent is required to deliver the form to the listing agent along with the offer to purchase. If the listing agent is working directly with the buyer, the agent must present the form directly to the seller. In any case, the Agency Disclosure Statement must be given to the seller prior to presenting the offer to purchase to the seller.
The practice of a listing agent having the seller sign an Agency Disclosure Statement at the time of listing is inconsistent with the agency disclosure process outlined above. The seller’s signature would not be acceptable on the form because mandatory information would be missing from the form when the seller signed it — specifically, the name and signature of the buyer(s), the identity of any buyer’s agent, and most importantly the agency relationships of the involved licensees. While there is nothing that would specifically prohibit a seller from signing an uncompleted form at the time of listing this would not satisfy the listing agent’s agency disclosure obligation under the license law and therefore serves very little purpose.
So why are listing agent’s doing this? Many listing agents have indicated that they have the seller complete the Agency Disclosure Statement at the time of listing so that the seller is familiar with the form. Of course, the form can be given to the seller without asking him to sign it. Other agents who are on a team say they upload the form with the seller’s name and the names of the agent(s) on that team who represent the seller so that buyer’s agents will have this information. While that may be a good idea, the same objective can be accomplished by having the form uploaded without the seller’s signature.
The bottom line is that having the seller sign the form at the time of listing cannot constitute true disclosure or consent to the future agency relationships in a transaction that has not occurred yet. Thus, if this form is uploaded by the listing agent and used later in connection with an offer to purchase, it will need to re-signed by the seller.
So, to summarize:
- Buyer’s agents are not required to use the Agency Disclosure form the listing agent uploaded to the MLS.
- Instead it is recommended that a buyer’s agent complete their own form containing the necessary information and the actual agency relationships of the agents involved, have the buyer sign that form and deliver it with the offer.
- The listing agent must present the Agency Disclosure Statement received from the buyer’s agent with the offer. If the agent does not, the agent is in violation of the license law.
- If a buyer’s agent does use the seller pre-signed form, it will need to be completed with the necessary information and signed by the buyer. The listing agent will then need to provide that version of the form to the seller prior to presenting the offer and have the seller sign and date it again.
- If a listing agent who had the seller pre-sign the Agency Disclosure form subsequently works directly with a buyer making an offer, the listing agent must fill in the missing information on the form, have the buyer sign it, and then present it to the seller for a second signature. This is especially crucial if the listing agent is acting as a dual agent. If this is not done, the agent will be found to have acted as an undisclosed dual agent. This cannot only result in severe disciplinary action by the Ohio Real Estate Commission, but can have serious ramifications in any civil action, including forfeiture of a commission and other potential damages as well.
The bottom line is that the purpose of Ohio’s agency disclosure law is to assure that both parties to a proposed transaction know the identity of the licensee(s) and brokerage(s) involved in the transaction and understand who they represent. Most importantly, it assures that both parties give their informed consent, especially in the event of dual agency.
Legal articles provided on the Ohio REALTORS Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.