28.2 AL – Brokerage Disclosure

Lesson 28 • Alabama Agency

Topic 28.2: Brokerage Disclosure

RECAD requires clear, early disclosure so consumers understand available brokerage relationships, compensation, and duties—before confidential information is shared and before brokerage services begin.

When disclosure must happen

RECAD requires brokers/licensees to disclose the non-agency relationship and the available brokerage services to a consumer as soon as reasonably possible. The disclosure must be provided before any confidential information is exchanged and before the licensee provides any brokerage services.

Required disclosure tool

Use the Real Estate Brokerage Services Disclosure form (required form).
Consumers are not required to sign the form.
If the consumer refuses to sign, the licensee should note the refusal on the form.
The form also discloses how the company and licensee are compensated.

Offer to purchase: required representation language

All offers to purchase must prominently contain a representation disclosure clause using prescribed language that states the type of agency being practiced. This applies to both the listing and selling licensees.

Agency disclosure office policy (company rules you must follow)

RECAD requires every qualifying broker to adopt and maintain an agency disclosure office policy that states which brokerage services the company may offer or accept. This policy must include an explanation of how the company and brokers are compensated.

Qualifying brokers must explain the office policy to all licensees at least once a year.
Licensees must sign an acknowledgement showing they received the policy statement.
Licensees must provide the office policy disclosure to consumers so they are fully informed.
Licensees may only engage in services offered by the company/qualifying broker—doing otherwise is a violation.

Real-world takeaway: Your company doesn’t have to offer every relationship type allowed by RECAD—but you must disclose what exists and what your company actually offers, and you must stay inside that policy.

Non-agency disclosure (default at first contact)

At the first contact between a licensee and a consumer, the licensee is not considered an agent of that consumer. Until there is a specific written agency agreement, an agency relationship is not assumed, implied, or created.

The Brokerage Services Disclosure form is used to explain available services and the specific services provided by that company. Disclosure should happen at initial contact or as soon as reasonably possible.

Customer vs. client (and why it changes duties)

Customer: receiving brokerage services but no signed agency agreement.
Client: has a signed agency agreement for specific brokerage services.

Licensees owe obligations to both customers and clients, but clients receive additional duties because an agency (fiduciary) relationship exists.

Brokerage relationships allowed under RECAD

1) Transaction facilitation (non-agency)

Broker works with one or more parties without becoming an agent or fiduciary.
Can be with or without a written agreement.
Must provide services honestly and in good faith and not show favoritism.
Must exercise reasonable care and skill, answer questions completely/accurately, and present written offers promptly and truthfully.
Must keep confidential information confidential unless disclosure is required by law.

Often best for consumers who want marketing + expertise, but don’t need an advocate for negotiation.

2) Single agency

Represents only one party (buyer or seller) in the transaction.
Written agency agreement required.
Agent must seek the best price/terms for the client and be loyal and faithful.

3) Dual agency

One licensee represents both buyer and seller in the same transaction.
Allowed only with written, informed consent of all parties.
Must not show favoritism and must not reveal one party’s confidential information to the other.
Offers more guidance than facilitation, but less loyalty than single agency (because duties can conflict).

Alabama note: if two licensees under the same qualifying broker represent different parties, Alabama treats them as single agents, and the qualifying broker/other licensees are assumed not to know the other party’s confidential information.

Minimum duties owed to all consumers (customers and clients)

Alabama law spells out duties owed to consumers whether or not a signed agreement exists. These are the baseline expectations for honest and fair treatment.

Provide services honestly and in good faith.
Exercise reasonable care and skill.
Keep confidential information confidential unless disclosure is required by law/duty, becomes public knowledge, or is authorized in writing.
Account for all property belonging to others that comes into the licensee’s possession.
Disclose the licensee’s personal interest in a property (including immediate family or entities with personal interest).
Provide requested information affecting the transaction unless disclosure is prohibited by law.
Accept delivery of and present all offers/counteroffers/addenda timely and truthfully.
Answer transaction questions completely and accurately.

Customer help (allowed): provide property info, show properties, assist in writing an offer, and provide financing information—without creating agency unless a written agreement is signed.

Extra duties owed to clients (once agency agreement is signed)

Put the client’s best interests ahead of others (unless doing so would violate duties to other consumers or violate law/rules).
Disclose to the client known information that is material and not reasonably discoverable (unless confidential and disclosure would violate duties).
Fulfill obligations required by the agency agreement and lawful client instructions within the agreement (unless they would violate duties or law).

If representing more than one client in the same transaction, the licensee owes the same duties to all represented clients—dual agency requires informed written consent.

Topic 28.2 Check-In

Disclose Your Role

Choose the best answer for each question, then select Check Answers.

RECAD requires the Brokerage Services Disclosure form to be provided:

Disclosure must occur as soon as reasonably possible—before confidential info is exchanged and before services begin.

Which brokerage relationship is a non-agency arrangement where the broker must not show favoritism?

Transaction facilitation is non-agency; the broker must act honestly, in good faith, and without favoritism.

🔒 Mark Complete unlocks when every answer is correct.