If you’re a real estate professional looking to take a familial client under your wing, you may be wondering if you’re legally obligated to disclose your relation, and to who.
In general, it’s encouraged that if there is a personal relationship, it is disclosed, however, it is only required if you are a Realtor. The National Association of Realtors states in Article 4 of the NAR Code of Ethics that,
“REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative.”
When reading between the lines of industry jargon, we see that this clearly states a Realtor must disclose the relationship as it could be a conflict of interest on either side of the parties’ transaction.
What types of relations must be disclosed?
The NAR’s Code of Ethics says the disclosure relates to immediate family members, but who all is included in this statement may differ depending on state law. The agent can ask the broker for clarification, though it typically includes those related by blood or marriage such as the following:
- Parents (including in-laws)
- Siblings (including those with adoptive, foster, step-, or half-relationships)
Yet, in some instances, the definition of immediate family can be expanded to the following:
- Aunts and uncles
- First cousins
To cover all bases, it’s best to disclose the relationship early and in writing. Nicholas B. Creel, an assistant professor of accounting and business law at Georgia College and State University in Milledgeville says,
“Listing agents should even consider disclosing this information up front in the MLS.”
In addition, many states include a required written form regarding the disclosure of the relationship to the client, and as Brittney Dale for DH Realty Partners in San Antonio, TX says,
“Disclosure is always the best policy.”