Broker Risk Management LLP Logo

Representative Capacity Signature Disclosures

by | Jul 26, 2019 | Contracts and Forms, Disclosures

Q:  Our office has been debating who needs to sign the “Acknowledgement of Receipt by Other Party” portion of the CAR Representative Capacity Signature Disclosure forms.  Can you please provide some guidance?

A:  To answer this question, it is necessary to understand how we got to where CAR is with the RCSD forms.

BACKGROUND:  Prior to the June, 2019 forms release, it was necessary to use two RCSD-S forms in a transaction.  One is for use when a listing was taken, referencing the Listing Agreement at the top, and the Seller’s Agent signs the “Acknowledgement of Receipt” for the form from the Seller.  A second RCSD-S form was required when the contract was being ratified, because then that second RCSD form would reference the Purchase Agreement at the top, and the Buyer would sign “Acknowledgement of Receipt” of that form from the Seller.

The same was true on the Buyer’s Agent side.  If the Buyer were signing the Purchase Agreement offer in a representative capacity (i.e., Trust, POA, Entity or Estate), then only one RCSD-B is required referencing the Purchase Agreement and the Seller signs the “Acknowledgement of Receipt” from the Buyer.  However, if the Buyer were also signing a Buyer Representation Agreement (e.g., BRE or BRNE on zipForms), then a separate RCSD-B form is required because that form would reference the Buyer Representation Agreement at the top, and the Buyer’s Agent would sign the “Acknowledgement of Receipt” from Buyer.

JUNE, 2019 FORMS RELEASE:  CAR sought to correct this situation such that only one RCSD-S form would be required and could be used for the Listing Agreement and the Purchase Agreement.  Ditto on the Buyer’s side, with one RCSD-B form used for a Buyer Representation Agreement (if one was used) and the Purchase Agreement.  That resulted in the forms that were released by CAR in June this year.

This change has led to the confusion regarding the use of these forms and who signs where when the party being represented is signing in a representative capacity:

RCSD-S

  1. When a Seller’s Agent is taking a listing the, the Seller’s information is added regarding in which capacity they are signing (Trust, POA, Entity, Estate); Seller signs it and the SELLER’S AGENT SIGNS the “Acknowledgement of Receipt” in the “AT TIME OF LISTING” box at the bottom of page 1.
  1. When the Seller is completing a Purchase Agreement offer, the Seller’s information is added regarding in which capacity they are signing (Trust, POA, Entity, Estate); Seller signs it and the Buyer signs the “Acknowledgement of Receipt” in the “AT THE TIME OF SALE” box at the top of page 2.  BUYER’S AGENT DOES NOT SIGN THIS FORM.

RCSD-B

  1. When the Buyer is completing a Purchase Agreement offer, the Buyer’s information is added regarding in which capacity they are signing (Trust, POA, Entity, Estate); Buyer signs it and the Seller signs the “Acknowledgement of Receipt” in the “AT THE TIME OF SALE” box at the bottom of page 1.  BUYER’S AGENT DOES NOT SIGN THIS FORM.
  1. IF a Buyer’s Agent is taking a Buyer Representation Agreement, the Buyer’s information is added regarding in which capacity they are signing (Trust, POA, Entity, Estate); Buyer signs it and BUYER’S AGENT SIGNS the “Acknowledgement of Receipt” in the “AT THE TIME OF BUYER REPRESENTATION AGREEMENT” at the top of page 2.    IF NO BUYER REPRESENTATION AGREEMENT IS USED, THIS FORM IS NOT NEEDED.

Other than as stated above, no other “Acknowledgement of Receipt” signatures are needed.

NOTE:  The same is true in a lease/rental situation where a landlord and/or tenant are signing an RCSD-LL or RCSD-T.

Also, note that the RCSD forms are structured as “Disclosures.”  The section where the Agent is asked to sign is merely a means of having the Agent “acknowledge receipt.” The best practice is to have the parties and agents sign as specified above.  However, if you can prove the document was delivered to any party to that particular RCSD form (Seller, Buyer or respective Agent) by some other means, such as a statement in an email from that party or agent that he/she refuses to sign it, nothing further is needed.

There is no legal requirement that the Agent must sign the CAR form but it is obviously the best practice to do so.  A broker can have an internal policy that its Agents need to sign documents that they receive to acknowledge receipt.

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is 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 2019                                                             07/26/19