Effective January 1, 2015, California State Legislature SB 1171 requires all commercial real estate agents and brokers to comply with the agency disclosure requirements previously only applicable to residential transactions. The bill states:
“Existing law requires listing and selling agents, as defined, to provide the seller and buyer in a residential real property transaction, including a leasehold interest, with a disclosure form, as prescribed, containing general information on real estate agency relationships. Existing law also requires the listing or selling agent to disclose to the buyer and seller whether he or she is acting as the buyer’s agent exclusively, the seller’s agent exclusively, or as a dual agent representing both the buyer and the seller.
This bill would extend these disclosure requirements to include transactions involving commercial real property, as defined, including a leasehold interest.”
Further, the bill redefined the term “real property” as used in Civil Code sections 2079.13 through 2079.24 to include commercial property. Effectively, this new law extends agency relationship disclosure to transactions involving commercial real property.
Statutory Agency Disclosures
- Civil Code 2079.14 - Commercial and residential brokers and agents are required to provide seller/landlord and buyer/tenant with a disclosure form “Disclosure Regarding Real Estate Agency Relationship” either (1) before entering into a listing agreement by a listing agent, (2) “as soon as practicable prior to presenting the seller with an offer to purchase” by a selling agent or (3) before executing an offer to purchase for the buyer by the selling agent. Essentially, the disclosure form should be provided to the buyer as soon as that buyer seeks the services of the agent, at least prior to the execution of the offer to purchase, except in the case that the offer to purchase is not prepared by the selling agent, then the selling agent shall present the disclosure form to the buyer not later than the next business day after the selling agent receives the offer to purchase from the buyer. (Civil Code 2079.14(d))
- Civil Code 2079.15 – it sets forth the procedure for brokers and agents in the case when an owner, seller or lessor refuses to sign the Civil Code 2079.16 disclosure form. In that event, the broker or agent will sign and date a written declaration of the facts of the refusal.
- Civil Code 2079.16 – it sets forth the contents of the “Disclosure Regarding Real Estate Agency Relationship” form. It also requires the text of the Civil Code 2079.13 through 2079.24 to be printed on the back of the disclosure form.
- Civil Code 2079.17 - In addition to providing the “Disclosure Regarding Real Estate Agency Relationship” required by Civil Code 2079.16, brokers and agents are now required to deliver a second disclosure form pursuant to this section. This section requires the broker or agent to disclose the nature of their representation by stating either the agent represents (1) the buyer or tenant exclusively, (2) the seller or landlord exclusively or (3) both the buyer or tenant and the seller or landlord as a dual agent.