Closing
CostsRESPAAgency
One of the most asked questions concerns closing costs for either buyer or seller. The examples given below are for a hypothetical conventional sale transaction of $100,000.00 in which the buyer is paying 5% down with a one point origination fee for the loan and in which the seller holds title to the property "free and clear", that is, owes nothing.
PROJECTED ESCROW CLOSING DATE: 1/06/97
PROPERTY TYPE: RESIDENCE
PURCHASE PRICE: $ 100000
1ST NEW LOAN: $ 95000 AT 7.5% INTEREST - CONVENTIONAL LOAN
DOWN PAYMENT: $ 5000 -- 5.00%
NON-RECURRING COSTS:
ONE POINT LOAN ORIGINATION $ 950
APPRAISAL & CREDIT REPORT 350
TITLE INSURANCE 289
ESCROW FEES 350
SUB-ESCROW 100
TAX SERVICE 75
MISC. 150
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PREPAID RECURRING EXPENSES:
IMPOUNDS :
TAXES--4 MONTHS $ 416
INSURANCE--2 MONTHS 52
PMI--2 MONTHS 124
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PREMIUMS:
INSURANCE 314
PMI PREMIUM--1ST YR 741
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PLUS: DOWN PAYMENT 5000
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* * * * * * * * * * * * * * * * * * * * * * * * * *
ESTIMATED MONTHLY PAYMENT SCHEDULE:
1ST LOAN MONTHLY PAYMENT $ 664
MONTHLY PROPERTY TAXES 104
MONTHLY INSURANCE 26
MONTHLY PMI 62
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THIS REPORT HAS BEEN PREPARED TO ASSIST THE BUYER IN COMPUTING HIS CHARGES. A SUPPLEMENTAL TAX BILL WILL CHANGE THE TAXES BASED UPON A REASSESSED TAX VALUE. SINCE ESCROW COMPANIES, LENDERS, AND OTHERS VARY IN THEIR CHARGES, THESE FIGURES ARE NOT GUARANTEED.
FIGURES ARE BASED ON FIXED RATE LOAN CALCULATIONS. ON A VARIABLE RATE LOAN, THE PAYMENTS MAY INCREASE. LENDERS MAY QUALIFY BASED ON THE NUMBER OF DEPENDENTS IN THE HOUSEHOLD AS WELL AS OTHER VARIABLES.
THESE FIGURES ARE ESTIMATES BASED ON INFORMATION AVAILABLE AT THE TIME OF COMPUTATION. THIS REPORT IS NOT INTENDED TO FULFILL ANY STATE OR FEDERAL DISCLOSURE REQUIREMENTS.
THE LOAN FEES [$ 950] ARE FEES PAID BY THE BORROWER OR BUYER TO PROCURE THE LOAN. LOAN FEES ARE ESTABLISHED BY THE LENDER GENERALLY IN DIRECT CORRELATION TO THE AGGREGATE DEMAND FOR MONEY.
THE APPRAISAL AND CREDIT REPORT [$ 350] IS THE COST OF TWO REPORTS. AN APPRAISAL IS AN ESTIMATE AND OPINION OF VALUE RESULTING FROM AN ANALYSIS OF THE PROPERTY. THE CREDIT REPORT USES THE LOAN APPLICATION AS THE SOURCE OF INFORMATION ON WHICH THE LENDER BASES HIS DECISION TO MAKE THE LOAN. THE PURPOSE OF THESE TWO REPORTS IS TO DETERMINE THE FINANCIAL SOUNDNESS OF THE INVESTMENT AND THE CREDIT WORTHINESS OF THE BUYER.
THE TITLE INSURANCE [$ 289] IS WRITTEN BY A TITLE COMPANY TO PROTECT THE LENDER AGAINST LOSS IF THE TITLE IS IMPERFECT. IT IS AN INSURED STATEMENT OF OWNERSHIP AND INDICATES WHAT THE TITLE ON THE PROPERTY IS SUBJECT TO IN TERMS OF LIENS, TAXES, ENCUMBRANCES, DEED RESTRICTIONS AND EASEMENTS. THE POLICY REMAINS IN FORCE UNTIL THE INSURED'S INTEREST IN THE PROPERTY IS CONVEYED OR OTHERWISE TRANSFERRED.
THE ESCROW FEE [$ 350] IS A CHARGE BY THE ESCROW COMPANY TO EXECUTE THE INSTRUCTIONS OF THE BUYER AND THE SELLER.
THE TAX SERVICE [$ 75] REPORTS BI-ANNUALLY TO THE LENDER CONCERNING THE TIMELY PAYMENT OF PROPER TAXES AND REPORTS ANY DELINQUENCIES.
THE MISCELLANEOUS FEES [$ 150] ALLOW FOR OTHER ADDITIONAL SERVICES PERFORMED DURING THE ESCROW PERIOD SUCH AS DOCUMENT PREPARATION, NOTARY FEES, OR RECORDATION.
THE TAX IMPOUNDS [$ 416] ALLOW A TRUST-TYPE ACCOUNT TO BE ESTABLISHED BY THE LENDER FOR THE ACCUMULATION OF FUNDS TO MEET TAX ASSESSMENTS REQUIRED TO PROTECT THEIR SECURITY. TAX IMPOUNDS ARE USUALLY COLLECTED WITH THE NOTE PAYMENT.
THE INSURANCE IMPOUNDS [$ 52] ALLOW A TRUST-TYPE ACCOUNT TO BE ESTABLISHED BY THE LENDER FOR THE ACCUMULATION OF FUNDS TO MEET FUTURE POLICY PREMIUMS REQUIRED TO PROTECT THEIR SECURITY. INSURANCE IMPOUNDS ARE USUALLY COLLECTED WITH THE NOTE PAYMENT.
THE INSURANCE [$ 314] IS NORMALLY REQUIRED BY THE LENDER TO PROTECT HIS INVESTMENT IN THE EVENT OF AN UNFORESEEN CALAMITY.
THE PREPAID INTEREST [$ 0] IS A PRORATION OF A PREPAID ITEM FOR A SPECIFIC PERIOD OF TIME BASED ON THE CLOSE OF ESCROW DATE.
THE ESTIMATED CASH TO CLOSE ESCROW [$ 8911] CONSISTS OF THE ESTIMATED CLOSING COSTS [$ 3911] PLUS THE DOWN PAYMENT [$ 5000] LESS THE DEPOSIT AND LESS ANY CREDITS BACK TO THE BUYER.
TYPE OF OFFER : CONVENTIONAL
PROJECTED ESCROW CLOSING DATE: 06/01/97
SELLING PRICE .................................. $ 100000
FIRST LOAN BALANCE $ 0
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TOTAL ENCUMBRANCES ............. $ 0 - 0
TITLE INSURANCE $ 626
DOCUMENTARY TAX STAMPS 110
ESCROW FEES 350
SUB-ESCROW FEES 100
DEMAND FEE 100
RECONVEYANCE FEE 75
TERMITE REPORT 65
TERMITE CORRECTIVE WORK UNKNOWN
BROKERAGE FEE 6000
MISC. CHARGES 300
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THIS REPORT HAS BEEN PREPARED TO ASSIST THE SELLER IN COMPUTING HIS CHARGES. ANY REPAIRS OR CORRECTIVE WORK NEEDS TO BE VERIFIED. PRORATIONS AND PAYOFF FEES VARY DEPENDING ON THE MONTH AND THE DAY THE ESCROW CLOSES. THESE FIGURES MAY NOT REFLECT ANY DELINQUENCY OR PRORATION IN TAXES, MORTGAGE PAYMENTS, ASSOCIATION DUES, OR UNDISCLOSED LIENS WHICH THE SELLER MAY OR MAY NOT BE AWARE OF. SINCE ESCROW COMPANIES, LENDERS, AND OTHERS VARY IN THEIR CHARGES, THESE FIGURES ARE NOT GUARANTEED.
THESE FIGURES ARE ESTIMATES BASED ON INFORMATION AVAILABLE AT THE TIME OF COMPUTATION. THIS REPORT IS NOT INTENDED TO FULFILL ANY STATE OR FEDERAL DISCLOSURE REQUIREMENTS
THE SELLING PRICE [$ 100000] IS THAT GROSS DOLLAR AMOUNT FOR WHICH YOUR PROPERTY IS SOLD.
THE FIRST TRUST DEED LOAN BALANCE [$ 0] IS THE REMAINING BALANCE OF THE EXISTING FIRST TRUST DEED. THE TRUST DEED IS THE LEGAL DOCUMENT WHEREIN THE PROPERTY WAS PLEDGED AS COLLATERAL FOR THE REPAYMENT OF THE LOAN.
THE BALANCE OF OTHER LOANS [$ 0] IS THE AMOUNT STILL OWED ON LOANS AND DEBTS AGAINST THE PROPERTY, OTHER THAN THE FIRST TRUST DEED LOAN BALANCE.
TOTAL ENCUMBRANCES [$ 0] IS THE TOTAL SUM OF ALL OUTSTANDING LOANS AND DEBTS ON THE PROPERTY.
THE GROSS EQUITY [$ 100000] IS THE DIFFERENCE BETWEEN THE SELLING PRICE AND THE TOTAL ENCUMBRANCES ON THE PROPERTY.
THE TITLE INSURANCE [$ 626] IS WRITTEN BY A TITLE COMPANY TO PROTECT THE PROPERTY OWNER AGAINST LOSS IF THE TITLE IS IMPERFECT. IT IS AN INSURED STATEMENT OF OWNERSHIP AND INDICATES WHAT THE TITLE ON THE PROPERTY IS SUBJECT TO IN TERMS OF LIENS, TAXES, ENCUMBRANCES, DEED RESTRICTIONS AND EASEMENTS. THE POLICY REMAINS IN FORCE UNTIL THE INSURED'S INTEREST IN THE PROPERTY IS CONVEYED OR OTHERWISE TRANSFERRED.
THE DOCUMENTARY TAX STAMPS [$ 110] ARE A STATE TAX ON THE SALE OF REAL PROPERTY, BASED ON THE SALE PRICE OR EQUITY TRANSFERRED.
THE ESCROW FEE [$ 350] IS A CHARGE BY THE ESCROW COMPANY TO EXECUTE THE INSTRUCTIONS OF THE BUYER AND THE SELLER.
THE TERMITE REPORT [$ 65] IS FOR A CERTIFIED INSPECTION OF THE STRUCTURE INVOLVED IN THE SALE. THIS FEE IS FOR THE REPORT ONLY. REPAIR AND CORRECTIVE WORK WOULD NORMALLY BE AN ADDITIONAL EXPENSE.
PREPAYMENT PENALTIES [$ 0] ARE CHARGES FOR THE PREPAYMENT OF THE SELLERS' EXISTING LOANS BEFORE THEY BECOME DUE. NORMALLY THIS EQUALS 6 MONTHS INTEREST ON 80% OF THE CURRENT LOAN BALANCE.
INTEREST PRORATIONS [$ 0] ARE INTEREST CHARGES YOU MUST PAY TO THE LENDER DURING THE ESCROW PERIOD. ONE MONTH'S INTEREST ON THE SELLER'S EXISTING LOAN IS USED AS AN ESTIMATE. ACTUAL INTEREST CHARGES ARE PRORATED FROM THE LAST PAYMENT TO THE DATE OF THE CLOSE OF ESCROW.
THE BROKERAGE COMMISSION [$ 6000] IS THE COMPENSATION RECEIVED BY THE BROKER FOR PERFORMING THE DUTIES OF HIS AGENCY. THE AMOUNT OR RATE OF THE BROKERAGE COMMISSION IS NOT FIXED BY LAW. IT IS SET BY EACH BROKER INDIVIDUALLY AND MAY BE NEGOTIABLE BETWEEN SELLER AND BROKER.
MISCELLANEOUS CHARGES [$ 300] ALLOW FOR OTHER ADDITIONAL SERVICES PERFORMED DURING THE ESCROW PERIOD SUCH AS DOCUMENT PREPARATION, NOTARY FEES, RECORDATION, OR RECONVEYANCE.
NON-RECURRING COSTS [$ 7726] APPROXIMATE THE SUM OF ALL THE SERVICE CHARGES ASSOCIATED WITH THE TRANSFER OF OWNERSHIP IN THE PROPERTY.
APPROXIMATE SELLER'S NET EQUITY [$ 92274] IS EQUAL TO THE GROSS EQUITY LESS THE ESTIMATED CLOSING COSTS.
APPROXIMATE SELLER'S NET CASH [$ 92274] IS THE AMOUNT OF CASH RECEIVED FROM THE SALE AFTER ACCOUNTING FOR ENCUMBRANCES, CLOSING COSTS, AND SELLER FINANCING.
![[Dividing Line Image]](images/div.gif){kind=small}
Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act (RESPA) is a consumer
protection statute, first passed in 1974. One of its purposes is
to help consumers become better shoppers for settlement services.
Another purpose is to eliminate kickbacks and
referral fees that increase unnecessarily the costs of certain
settlement services. RESPA requires that borrowers receive
disclosures at various times. Some disclosures spell out the
costs associated with the settlement, outline lender servicing
and escrow account practices and describe business relationships
between settlement service providers.
RESPA also prohibits certain practices that increase the cost of
settlement services. Section 8 of RESPA prohibits a person from
giving or accepting any thing of value for referrals of
settlement service business related to a federally related
mortgage loan. It also prohibits a person from giving or
accepting any part of a charge for services that are not
performed. Section 9 of RESPA prohibits home sellers from
requiring home buyers to purchase title insurance from a
particular company.
Generally, RESPA covers loans secured with a mortgage placed on a
one-to-four family residential property. These include most
purchase loans, assumptions, refinances, property improvement
loans, and equity lines of credit. HUD's Office of Consumer and
Regulatory Affairs, Interstate Land Sales/RESPA Division is
responsible for enforcing RESPA.
MORE RESPA FACTS
DISCLOSURES:
DISCLOSURES AT THE TIME OF LOAN APPLICATION
When borrowers apply for a mortgage loan, mortgage brokers and/or
lenders must give the borrowers:
a Special Information Booklet, which contains consumer
information regarding various real estate settlement services.
(Required for purchase transactions only).
a Good Faith Estimate (GFE) of settlement costs, which lists the
charges the buyer is likely to pay at settlement. This is only an
estimate and the actual charges may differ. If a lender requires
the borrower to use of a particular settlement provider, then the
lender must disclose this requirement on the GFE.
a Mortgage Servicing Disclosure Statement, which discloses to the
borrower whether the lender intends to service the loan or
transfer it to another lender. It also provides information about
complaint resolution.
If the borrowers don't get these documents at the time of
application, the lender must mail them within three business days
of receiving the loan application. If the lender turns down the
loan within three days, however, then RESPA does not require the
lender to provide these documents. The RESPA statute does not
provide an explicit penalty for the failure to provide the
Special Information Booklet, Good Faith Estimate or Mortgage
Servicing Statement. Bank regulators, however, may impose
penalties on lenders who fail to comply with federal law.
DISCLOSURES BEFORE SETTLEMENT (CLOSING) OCCURS
An Affiliated Business Arrangement (AfBA) Disclosure is required
whenever a settlement service provider involved in a RESPA
covered transaction refers the consumer to a provider with whom
the referring party has an ownership or other beneficial
interest.
The referring party must give the AfBA disclosure to the consumer
at or prior to the time of referral. The disclosure must describe
the business arrangement that exists between the two providers
and give the borrower an estimate of the second provider's
charges. Except in cases where a lender refers a borrower to an
attorney, credit reporting agency or real estate appraiser to
represent the lender's interest in the transaction, the referring
party may not require the consumer to use the particular provider
being referred.
The HUD-1 Settlement Statement is a standard form that clearly
shows all charges imposed on borrowers and sellers in connection
with the settlement. RESPA allows the borrower to request to see
the HUD-1 Settlement Statement one day before the actual
settlement. The settlement agent must then provide the borrowers
with a completed HUD-1 Settlement Statement based on information
known to the agent at that time.
DISCLOSURES AT SETTLEMENT
The HUD-1 Settlement statement shows the actual settlement costs
of the loan transaction. Separate forms may be prepared
for the borrower and the seller. Where it is not the practice
that the borrower and seller attend settlement, the HUD-1 should
be mailed or delivered as soon as practicable after settlement.
The Initial Escrow Statement itemizes the estimated taxes,
insurance premiums and other charges anticipated to be paid from
the escrow account during the first twelve months of the loan. It
lists the escrow payment amount and any required cushion.
Although the statement is usually given at settlement, the lender
has 45 days from settlement to deliver it.
DISCLOSURES AFTER SETTLEMENT
Loan servicers must deliver to borrowers an Annual Escrow
Statement once a year. The annual escrow account statement
summarizes all escrow account deposits and payments during the
servicer's twelve month computation year. It also notifies the
borrower of any shortages or surpluses in the account and advises
the borrower about the course of action being taken.
A Servicing Transfer Statement is required if the loan servicer
sells or assigns the servicing rights to a borrower's loan to
another loan servicer. Generally, the loan servicer must notify
the borrower 15 days before the effective date of the loan
transfer. As long the borrower makes a timely payment to the old
servicer within 60 days of the loan transfer, the borrower cannot
be penalized. The notice must include the name and address of the
new servicer, toll-free telephone numbers, and the date the new
servicer will begin accepting payments.
RESPA'S CONSUMER PROTECTIONS and PROHIBITED PRACTICES
Section 8: Kickbacks, Fee-Splitting, Unearned Fees
Section 8 of RESPA prohibits anyone from giving or accepting a
fee, kickback or any thing of value in exchange for referrals of
settlement service business involving a federally related
mortgage loan. In addition, RESPA prohibits fee splitting and
receiving unearned fees for services not actually performed.
Violations of Section 8's anti-kickback, referral fees and
unearned fees provisions of RESPA are subject to criminal and
civil penalties. In a criminal case a person who violates Section
8 may be fined up to $10,000 and imprisoned up to one year. In a
private law suit a person who violates Section 8 may be liable to
the person charged for the settlement service an amount equal to
three times the amount of the charge paid for the service.
Section 9: Seller Required Title Insurance
Section 9 of RESPA prohibits a seller from requiring the home
buyer to use a particular title insurance company, either
directly
or indirectly, as a condition of sale. Buyers may sue a seller
who violates this provision for an amount equal to three times
all
charges made for the title insurance.
Section 10: Limits on Escrow Accounts
Section 10 of RESPA sets limits on the amounts that a lender may
require a borrower to put into an escrow account for purposes of
paying taxes, hazard insurance and other charges related to the
property. RESPA does not require lenders to impose an escrow
account on borrowers; however, certain government loan programs
or lenders may require escrow accounts as a condition of the
loan.
During the course of the loan, RESPA prohibits a lender from
charging excessive amounts for the escrow account. Each month the
lender may require a borrower to pay into the escrow account no
more than 1/12 of the total of all disbursements payable during
the year, plus an amount necessary to pay for any shortage in the
account. In addition, the lender may require a cushion, not to
exceed an amount equal to 1/6 of the total disbursements for the
year.
The lender must perform an escrow account analysis once during
the year and notify borrowers of any shortage. Any excess of
$50 or more must be returned to the borrower.
RESPA ENFORCEMENT
Civil law suits :
Individuals have one (1) year to bring a private law suit to
enforce violations of Section 8 or 9. A person may bring an
action for violations of Section 6 within three years. Lawsuits
for violations of Section 6, 8, or 9 may be brought in any
federal district court in the district in which the property is
located or where the violation is alleged to have occurred.
HUD, a State Attorney General or State insurance commissioner may
bring an injunctive action to enforce violations of Section 6, 8
or 9 of RESPA within three (3) years.
Loan Servicing Complaints:
Section 6 provides borrowers with important consumer protections
relating to the servicing of their loans. Under Section 6 of
RESPA, borrowers who have a problem with the servicing of their
loan (including escrow account questions), should contact their
loan servicer in writing, outlining the nature of their
complaint. The servicer must acknowledge the complaint in writing
within 20 business days of receipt of the complaint. Within 60
business days the servicer must resolve the complaint by
correcting the account or giving a statement of the reasons for
its position. Until the complaint is resolved, borrowers should
continue to make the servicer's required payment.
A borrower may bring a private law suit, or a group of borrowers
may bring a class action suit, within three years, against a
servicer who fails to comply with Section 6's provisions.
Borrowers may obtain actual damages, as well as additional
damages if there is a pattern of noncompliance.
Other Enforcement Actions:
Under Section 10, HUD has authority to impose a civil penalty on
loan servicers who do not submit initial or annual escrow account
statements to borrowers. Borrowers should contact HUD's Office of
Consumer and Regulatory Affairs to report servicers who fail to
provide the required escrow account statements.
Filing a RESPA Complaint :
Persons who believe a settlement service provider has violated
RESPA in an area in which the Department has enforcement
authority (primarily sections 6, 8 and 9), may wish to file a
complaint. The complaint should outline the violation and
identify the violators by name, address and phone number.
Complainants should also provide their own name and phone number
for follow up questions from HUD. Requests for confidentiality
will be honored. Complaints should be sent to:
Director, Interstate Land Sales/RESPA Division
Office of Consumer and Regulatory Affairs
U.S. Department of Housing and Urban Development
Room 9146
451 7th Street, SW,
Washington, DC 20410
2079.13. As used in Sections 2079.14 to 2079.24, inclusive, the following terms have the following meanings:
(a) "Agent" means a person acting under provisions of Title 9 (commencing with Section 2295) in a real property transaction, and includes a person who is licensed as a real estate broker under Chapter 3 (commencing with Section 10130) of Part 1 of Division 4 of the Business and Professions Code, and under whose license a listing is executed or an offer to purchase is obtained.
(b) "Associate licensee" means a person who is licensed as a real estate broker or salesperson under Chapter 3 (commencing with Section 10130) of Part 1 of Division 4 of the Business and Professions Code and who is either licensed under a broker or has entered into a written contract with a broker to act as the broker's agent in connection with acts requiring a real estate license and to function under the broker's supervision in the capacity of an associate licensee. The agent in the real property transaction bears responsibility for his or her associate licensees who perform as agents of the agent. When an associate licensee owes a duty to any principal, or to any buyer or seller who is not a principal, in a real property transaction, that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions.
(c) "Buyer" means a transferee in a real property transaction, and includes a person who executes an offer to purchase real property from a seller through an agent, or who seeks the services of an agent in more than a casual, transitory, or preliminary manner, with the object of entering into a real property transaction. "Buyer" includes vendee or lessee.
(d) "Dual agent" means an agent acting, either directly or through an associate licensee, as agent for both the seller and the buyer in a real property transaction.
(e) "Listing agreement" means a contract between an owner of real property and an agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer.
(f) "Listing agent" means a person who has obtained a listing of real property to act as an agent for compensation.
(g) "Listing price" is the amount expressed in dollars specified in the listing for which the seller is willing to sell the real property through the listing agent.
(h) "Offering price" is the amount expressed in dollars specified in an offer to purchase for which the buyer is willing to buy the real property.
(i) "Offer to purchase" means a written contract executed by a buyer acting through a selling agent which becomes the contract for the sale of the real property upon acceptance by the seller.
(j) "Real property" means any estate specified by subdivision (1) or (2) of Section 761 in property which constitutes or is improved with one to four dwelling units, any leasehold in this type of property exceeding one year's duration, and mobilehomes, when offered for sale or sold through an agent pursuant to the authority contained in Section 10131.6 of the Business and Professions Code.
(k) "Real property transaction" means a transaction for the sale of real property in which an agent is employed by one or more of the principals to act in that transaction, and includes a listing or an offer to purchase.
(l) "Sell," "sale," or "sold" refers to a transaction for the transfer of real property from the seller to the buyer, and includes exchanges of real property between the seller and buyer, transactions for the creation of a real property sales contract within the meaning of Section 2985, and transactions for the creation of a leasehold exceeding one year's duration.
(m) "Seller" means the transferor in a real property transaction, and includes an owner who lists real property with an agent, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from an agent on behalf of another. "Seller" includes both a vendor and a lessor.
(n) "Selling agent" means a listing agent who acts alone, or an agent who acts in cooperation with a listing agent, and who sells or finds and obtains a buyer for the real property, or an agent who locates property for a buyer or who finds a buyer for a property for which no listing exists and presents an offer to purchase to the seller.
(o) "Subagent" means a person to whom an agent
delegates agency powers as provided in Article 5 (commencing with
Section 2349) of Chapter 1 of Title 9. However,
"subagent" does not include an associate licensee who
is acting under the supervision of an agent in a real property
transaction.
2079.14. Listing agents and selling agents shall provide the
seller and buyer in a real property transaction with a copy of
the disclosure form specified in Section 2079.16, and, except as
provided in subdivision (c), shall obtain a signed acknowledgment
of receipt from that seller or buyer, except as provided in this
section or Section 2079.15, as follows:
(a) The listing agent, if any, shall provide the disclosure
form to the seller prior to entering into the listing agreement.
(b) The selling agent shall provide the disclosure form to the
seller as soon as practicable prior to presenting the seller with
an offer to purchase, unless the selling agent previously
provided the seller with a copy of the disclosure form pursuant
to subdivision (a).
(c) Where the selling agent does not deal on a face-to-face basis
with the seller, the disclosure form prepared by the selling
agent may be furnished to the seller (and acknowledgment of
receipt obtained for the selling agent from the seller) by the
listing agent, or the selling agent may deliver the disclosure
form by certified mail addressed to the seller at his or her last
known address, in which case no signed acknowledgment of receipt
is required.
(d) The selling agent shall provide the disclosure form to the
buyer as soon as practicable prior to execution of the buyer's
offer to purchase, except that if the offer to purchase is not
prepared by the selling agent, 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.
2079.15. In any circumstance in which the seller or buyer refuses
to sign an acknowledgment of receipt pursuant to Section 2079.14,
the agent, or an associate licensee acting for an agent, shall
set forth, sign, and date a written declaration of the facts of
the refusal.
2079.16. The disclosure form required by Section 2079.14 shall
have Sections 2079.13 to 2079.24, inclusive, excluding this
section, printed on the back, and on the front of the disclosure
form the following shall appear:
DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(As required by the Civil Code)
When you enter into a discussion with a real estate agent
regarding a real estate transaction, you should from the outset
understand what type of agency relationship or representation you
wish to have with the agent in the transaction.
SELLER'S AGENT
A Seller's agent under a listing agreement with the Seller acts
as the agent for the Seller only. A Seller's agent or a subagent
of that agent has the following affirmative obligations:
To the Seller:
A fiduciary duty of utmost care, integrity, honesty, and loyalty
in dealings with the Seller.
To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance
of the agent's duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of,
the parties.
An agent is not obligated to reveal to either party any
confidential information obtained from the other party that does
not involve the affirmative duties set forth above.
BUYER'S AGENT
A selling agent can, with a Buyer's consent, agree to act as
agent for the Buyer only. In these situations, the agent is not
the Seller's agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part
from the Seller. An agent acting only for a Buyer has the
following affirmative obligations:
To the Buyer:
A fiduciary duty of utmost care, integrity, honesty, and loyalty
in dealings with the Buyer.
To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance
of the agent's duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of,
the parties. An agent is not obligated to reveal to either party
any confidential information obtained from the other party that
does not involve the affirmative duties set forth above.
AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acting directly or through one or
more associate licensees, can legally be the agent of both the
Seller and the Buyer in a transaction, but only with the
knowledge and consent of both the Seller and the Buyer. In a dual
agency situation, the agent has the following affirmative
obligations to both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and
loyalty in the dealings with either the Seller or the Buyer.
(b) Other duties to the Seller and the Buyer as stated above in
their respective sections.
In representing both Seller and Buyer, the agent may not, without the express permission of the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered.
The above duties of the agent in a real estate transaction do not
relieve a Seller or Buyer from the responsibility to protect his
or her own interests. You should carefully read all agreements to
assure that they adequately express your understanding of the
transaction. A real estate agent is a person qualified to advise
about real estate. If legal or tax advice is desired, consult a
competent professional.
Throughout your real property transaction you may receive more
than one disclosure form, depending upon the number of agents
assisting in the transaction. The law requires each agent with
whom you have more than a casual relationship to present you with
this disclosure form. You should read its contents each time it
is presented to you, considering the relationship between you and
the real estate agent in your specific transaction. This
disclosure form includes the provisions of Sections 2079.13 to
2079.24, inclusive, of the Civil Code set forth on the reverse
hereof. Read it carefully.
_______________________________ ___________________________
Agent (date) Buyer/Seller (date)
(Signature)
_______________________________ ___________________________
Associate Licensee (date) Buyer/Seller (date)
(Signature) (Signature)
2079.17. (a) As soon as practicable, the selling agent shall
disclose to the buyer and seller whether the selling agent is
acting in the real property transaction exclusively as the
buyer's agent, exclusively as the seller's agent, or as a dual
agent representing
both the buyer and the seller. This relationship shall be
confirmed in the contract to purchase and sell real property or
in a separate writing executed or acknowledged by the seller, the
buyer, and the selling agent prior to or coincident with
execution of that contract by the buyer and the seller,
respectively.
(b) As soon as practicable, the listing agent shall disclose to the seller whether the listing agent is acting in the real property transaction exclusively as the seller's agent, or as a dual agent representing both the buyer and seller. This relationship shall be confirmed in the contract to purchase and sell real property or in a separate writing executed or acknowledged by the seller and the listing agent prior to or coincident with the execution of that contract by the seller.
(c) The confirmation required by subdivisions (a) and (b)
shall be in the following form:
_____________________________ is the agent of (check one):
(Name of Listing Agent)
( ) the seller exclusively; or
( ) both the buyer and seller.
__________________________________________________________________
(Name of Selling Agent if not the same as the Listing Agent)
is the agent of (check one):
( ) the buyer exclusively; or
( ) the seller exclusively; or
( ) both the buyer and seller.
(d) The disclosures and confirmation required by this section
shall be in addition to the disclosure required by Section
2079.14.
2079.18. No selling agent in a real property transaction may act
as an agent for the buyer only, when the selling agent is also
acting as the listing agent in the transaction.
2079.19. The payment of compensation or the obligation to pay
compensation to an agent by the seller or buyer is not
necessarily determinative of a particular agency relationship
between an agent and the seller or buyer. A listing agent and a
selling agent may agree to share any compensation or commission
paid, or any right to any compensation or commission for which an
obligation arises as the result of a real estate transaction, and
the terms of any such agreement shall not necessarily be
determinative of a particular relationship.
2079.20. Nothing in this article prevents an agent from
selecting, as a condition of the agent's employment, a specific
form of agency relationship not specifically prohibited by this
article if the requirements of Section 2079.14 and Section
2079.17 are complied with.
2079.21. A dual agent shall not disclose to the buyer that the
seller is willing to sell the property at a price less than the
listing price, without the express written consent of the seller.
A dual agent shall not disclose to the seller that the buyer is
willing to pay a price greater than the offering price, without
the express written consent of the buyer. This section does not
alter in any way the duty or responsibility of a dual agent to
any principal with respect to confidential information other than
price.
2079.22. Nothing in this article precludes a listing agent from
also being a selling agent, and the combination of these
functions in one agent does not, of itself, make that agent a
dual agent.
2079.23. A contract between the principal and agent may be
modified or altered to change the agency relationship at any time
before the performance of the act which is the object of the
agency with the written consent of the parties to the agency
relationship.
2079.24. Nothing in this article shall be construed to either
diminish the duty of disclosure owed buyers and sellers by agents
and their associate licensees, subagents, and employees or to
relieve agents and their associate licensees, subagents, and
employees from liability for their conduct in connection with
acts governed by this article or for any breach of a fiduciary
duty or a duty of disclosure.
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