Q: We represent a Buyer who is refusing the sign the Agency Disclosure form or any of the Standard Advisories that our company routinely provides. She says she “does not agree” with the information in those documents. What should we do?
A: The Buyer is not being asked to agree to any of the information contained in the Agency Disclosure form or any other Advisory. The information directly above the Buyer’s signature line states that the short answer is that all deals on all types of property regardless of Agency Relationships should have at least 1 version of the Square Footage and Lot Size Disclosure and Advisory (for sake of brevity that form is referred to in this Tip as the “Size Advisory/Disclosure”).
It is not important which agent provides the Size Advisory/Disclosure as long as the Buyer gets that form BUT the real key to this topic is making sure that all known sizes are disclosed.
With respect to the specific questions asked, the answers are as follows:
Q1. When representing only the Buyer, should we always provide the Size Advisory/Disclosure?
A1. Although it will not harm the Buyer to receive that form from both Brokers, the Buyer’s Agent may not need to provide the form. The primary criteria to determine whether or not the Buyer’s Agent needs to provide their own version of the Size Advisory/Disclosure are as follows:
- Did the Listing Agent provide a Size Advisory/Disclosure signed by the Seller?
- Did the Listing Agent provide any square footage and lot size data?
- Does the Selling Agent know of any other square footage and lot size data?
If a Size Advisory/Disclosure form was used by the Listing Agent and signed by the Seller that contains all known sizes and the Buyer’s Agent does not know of any other sizes, then the Buyer’s Agent does not need to provide their own version of that form.
Although it is not legally required, every Broker is free to make a business decision as to whether or not to require that their Sales Associates must always prepare a Size Advisory/Disclosure regardless of who their Sales Associates represent and regardless of whether the other Broker has provided the form.
2Q. What are some specific examples of when the Agent representing the Buyer should always use our own Size Advisory/Disclosure?
2A. The Buyer’s Agent should provide the Buyer with the Size Advisory/Disclosure created by Buyer’s Agent in the following situations:
- If the Listing Agent did not provide any Size Advisory/Disclosure;
- If the Listing Agent provides a Size Advisory/Disclosure but it does not have any sizes listed at all;
- If the Listing Agent failed to provide a Size Advisory/Disclosure that is comparable to the form that is being used by your office – it does not need to be exactly the same form, but it should have the same information and format and, preferably, it should be signed by the Seller;
- If the Buyer’s Agent has provided the Buyer with a flyer or MLS information that contains size information, the best practice is to provide the Size Advisory/Disclosure created by the Buyer’s Agent at or around the same time as the Buyer’s Agent is providing that size information;
- If the Buyer’s Agent learns of any other sizes that are not already specified by the Listing Agent in the Listing Agent’s Size Advisory/Disclosure; or
- If the Buyer asks any questions about square footage or lot size and in particular when the Buyer wants to know which size is the “correct size.” Everyone needs to remember that there is no single correct size – there are multiple sizes depending upon who is taking the measurements and Buyers who are seeking confirmation as to which size they should use, need to receive a Size Advisory/ Disclosure created by Buyer’s Agent to reinforce the fact that Brokers cannot make that determination.
Q3. If the Listing Agent provides the Size Advisory/Disclosure but the Buyer’s Agent knows that there are other sizes from other sources, should that additional information be added to the Listing Agent’s Size Advisory/Disclosure?
A3. Under no circumstances should the Buyer’s Agent add any information to the Listing Agent’s Size Advisory/Disclosure. Once any contract or disclosure document is signed by one side of the transaction, the other side of the transaction should never add or change that document above the signatures. If the Buyer’s Agent has additional size information, then the Buyer’s Agent should put that “new data” in their own version of the Size Advisory/Disclosure form. As part of that process, the Buyer’s Agent should include the Listing Agent’s data in the size grid referencing that other broker’s form as the source of that data and attach a copy of the Listing Agent’s form to the Size Advisory/Disclosure created by Buyer’s Agent.
Q4. If the Buyer’s Agent has created the Size Advisory/Disclosure, do we need to get the Seller and Listing Agent to sign our form?
A4. It is a good practice to request that the Seller and Listing Agent sign the Size Advisory/Disclosure created by Buyer’s Agent but that is not a required step. The two most critical signatures on the Size Advisory/Disclosure created by Buyer’s Agent are the signatures of the Buyer’s Agent and the Buyer. The Broker file should document reasonable efforts to secure the signatures from the Seller and Listing Agent on the Size Advisory/Disclosure created by Buyer’s Agent but any failure or refusal of the Listing Agent and/or the Seller to sign the Size Advisory/Disclosure created by Buyer’s Agent should be pointed out to the Buyer in writing (such as in an e-mail) explaining the steps that have already been taken to secure those missing signatures and then it is up to the Buyer as to how much additional effort is needed, if any, to secure the missing signatures. However, do not delay delivery to the Buyer of the Size Advisory/Disclosure created by Buyer’s Agent simply because the Seller and/or Listing Agent have not signed that document.
Q5. Does the Selling Agent always need to research public records to find additional size information over and above the data provided by the Listing Agent and/or should we measure the property ourselves?
A5 The Selling Agent is obligated to disclose known size discrepancies. If the Listing Agent failed to include in the Size Advisory/Disclosure the size information that is “auto-populated” by the MLS and/or the data that is readily available online through the MLS as part of a “property profile,” then that data does need to be disclosed in a Size Advisory/Disclosure created by the Buyer’s Agent but, beyond that, neither the Listing nor the Selling Agent is obligated to conduct any off-site searches. Neither the Listing nor the Selling Agent should ever measure the structures or the lot. All of the real estate industry advisories are replete with warnings that real estate professionals cannot, and will not, determine the actual size, and efforts to measure any aspect of the property could mislead the Buyers into believing that there is only one true size.
THE BEST PRACTICES FOR BUYER’S AGENTS:
- As noted in our Weekly Tip dated October 3, 2017, the best practice for Selling Agents upon receipt of a Size Advisory/Disclosure or a comparable document, from the Listing Agent, is to promptly provide the form to the Buyer and get proof of delivery (e.g., the Buyer signs the form). The best time to provide that documentation is prior to ratifying the Purchase Agreement.
- Selling Agents should read the Listing Agent’s Size Advisory/Disclosure before providing it to the Buyer to determine if all known sizes have been disclosed in that form.
- If a Listing Agent does not provide a properly-completed Size Advisory/Disclosure, or a comparable document, then the Selling Agent should prepare a Size Advisory/Disclosure form with the size information that has been provided in the MLS and/or the Listing Agent’s marketing materials, or any other materials that the Selling Agent has obtained.
- The Selling Agent should request that the Seller and Listing Agent sign the Size Advisory/Disclosure created by the Buyer’s Agent so as to confirm that the Seller and Listing Agent have no additional knowledge or documents regarding the size issues referenced in the form but it is up to the Buyer as to whether or not to “chase signatures” if the Seller and/or Listing Agent refuse to sign the form created by the Buyer’s Agent.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is attorney-client privileged and for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2017 12/29/17