Vol. 11, No. 2, Pg. 38. Agency Disclosure: A Real Estate Broker's Responsibility.

• Author: By Ronald J. Maas

South Carolina Lawyer

1999.

Vol. 11, No. 2, Pg. 38.

Agency Disclosure: A Real Estate Broker's Responsibility

38AGENCY DISCLOSURE: A Real Estate Broker's ResponsibilityBy Ronald J. MaasIn 1983, the Federal Trade Commission's Los Angeles Regional Office issued a study, The Residential Real Estate Brokerage Industry, which concluded that most buyers or tenants of residential real estate assumed that the real estate salesperson showing them properties worked for the buyer or tenant when in reality the salesperson often represented the seller or landlord.

The report indicated that legislation was needed to require real estate brokers and their salespersons to disclose to buyers and tenants who the broker or salesperson represented in a residential real estate transaction. The National Association of Realtors, a national trade organization representing more than 50 percent of the active licensed real estate licensees in the United States, has been urging each of the 50 states to adopt state legislation requiring agency disclosure. See Report of Prudential Advisory Group on Agency, National Association of Realtors, 1992.

On January 1, 1998, a comprehensive amendment to the South Carolina law governing the licensing of real estate brokers, salespeople and property managers became effective that requires agency disclosure by persons holding a South Carolina real estate license. S.C. Code §§ 40-575 et seq., amended in 1997 by Act No. 24 that became law without the Governor's signature on May 22, 1997.

The new law provides, in part, that a broker licensee may establish permissible agency relationships as a seller's agent, a buyer's agent, a disclosed dual agent or subagency and must have a written company policy that describes the agency relationship in which "associated licensees may engage." S.C. Code § 4057-137.

The company policy must address the following issues: (1) cooperation with subagents and buyer's agents; (2) whether the company offers compensation to those agents; (3) the scope of services to be provided to clients and customers; (4) how and when disclosure will be made to parties interested in a transaction subject to the minimum requirements of the Act; (5) how and when disclosure will be made regarding disclosed dual agency as permitted by the Act; and (6) the company policy with respect to compliance with state and...