When does a listing agent need to disclose their familial relationship with the seller?
QUESTION: Does a listing agent who is related to a seller-client in a transaction have to disclose their relationship? I know this is a Code of Ethics issue, but I have been asked whether it is also required under North Carolina law. If disclosure is required, is putting a note in the MLS sufficient?
ANSWER: Article 4 of the Code of Ethics provides that when a REALTOR® sells property they own or have any interest in, they “shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative.” There is no correlating North Carolina Real Estate Commission rule or other North Carolina law that specifically requires disclosure to the buyer of a listing agent’s family relationship. There is also no rule mandating that the disclosure be made in the agency agreement or contract. However, N.C.G.S. § 93A-6 does, more broadly, prohibit an agent from misrepresenting material facts and “[a]cting for more than one party in a transaction without the knowledge of all parties for whom he or she acts.”
The provisions of Article 4 make clear that a listing agent only needs to disclose a family relationship with the seller if the agent also has an interest in the property due to their relationship with the seller. The case interpretations of Article 4 show that REALTORS® should err on the side of caution when evaluating their potential property interest.
If an agent has an interest in one of their listed properties by virtue of their family ties with the seller, Standard of Practice 4-1 of the Code of Ethics mandates that the disclosure required by Article 4 be made in writing and provided prior to the signing of any contract. We believe that disclosure in the MLS would fulfill the requirements of Article 4 and Standard of Practice 4-1, assuming the buyer or their agent has access to the MLS. However, in cases where a buyer may not have access, the disclosure under Article 4 should be made in a separate writing, such as an email, prior to the signing of the contract.
Release Date: 11/1/2016
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