Must I Disclose My Client Relationship?

What are the disclosure requirements when your clients are family members?

September 1, 2010

Q: I’m listing a property and the sellers are my brother and sister-in-law. Am I required to disclose that?

A: Article 4 of the Code of Ethics covers disclosure of personal interest in property. "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 . . . without making their true position known to the owner or the owner’s agent or broker."

"Immediate family" is defined in the Code and in the Arbitration Manual to include "the REALTORS®'s spouse and their siblings, parents, grandparents, children, grandchildren, and other descendants."

Disclosure also is required when selling property that you own or in which you have any interest: "REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative."

However, the obligation to disclose that you’re working with an "immediate family" member applies only to situations in which your family member is the buyer.

In your situation representing sellers, you’re obligated to disclose ownership or "any interest" in the property being sold. That would include any legal ownership or possible future ownership, such as through inheritance.

For example, if your brother had named you as a beneficiary or heir of the property in his will, you would be best served by disclosing that interest in the property.

But, if you have no possibility of inheriting the property, you would likely not have any current or future interest in the property requiring disclosure under the Code. Always remember that state license law could require additional or different disclosures of "interests" or "relatives’ interests" in representing a family member.

Bruce Aydt

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.