by Paul Cowhig, Advisor, Professional Standards
The Disclosure to Sellers of Expected Remuneration is one of the new Council forms we are obliged to use since June 15 this year. I simply call it a ‘net sheet.’
Every seller is going to need and want to know the bottom line with any deal they contemplate accepting. This form does that in clear, transparent and certain terms.
That said, there has been some confusion about exactly when this form needs to be dealt with. Some of us are interpreting the rule to mean the form must be executed before the actual offer is presented. This is not the case.
In fact, the rule requires that the disclosure is made with the offer presentation and before the offer is accepted or countered. Think about the intent of the disclosure.
The intent is that no seller will say yes to a transaction without knowing exactly what they are saying yes to. Disclosures, by their nature must be made before the client makes a decision that would be influenced by what is being disclosed. So, disclosure of a material latent defect to a buyer must be made before the buyer makes an offer because awareness of that material defect will have a direct impact on the offer.
The buyer needs to know this information ahead of making the offer so they can properly assess the real costs and the commitment they are making. In this case, disclosure of the expected remuneration that the seller will pay needs to be clear so that they can properly assess the net value of any offer they are considering.
The seller certainly needs to know that before they sign, but not necessarily before the offer is presented in its entirety.
Happy selling!
Update:
Although the Disclosure to Sellers of Expected Remuneration form indicates, “A real estate professional representing you in the sale of your property must give you a copy of this disclosure form before presenting each offer (or counter-offer)…” Council has taken the following position, which is stated on their Knowledge Base website.
“Each time a trading services licensee presents an offer to their seller client, they must include a completed disclosure form that informs the client about the remuneration the licensee’s brokerage will receive.”
Council has advised the FVREB, contrary to the wording in the Disclosure to Sellers of Expected Remuneration form, you must present the form prior to the client signing the offer.