Do you have to provide the IABS form to commercial clients?

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Smiling man shakes hands with real estate agent while man's wife looks on.

01/16/2015 | Author: Editorial Staff

If a prospective client approaches me about purchasing a commercial property, do I have to give them the Information about Brokerage Services form?

Yes. The Real Estate License Act requires licensees to provide a specific written statement about agency relationships to a party to a real estate transaction at the time you have the first substantive dialogue with that party. The Information about Brokerage Services form (TAR 2501, TREC OP-K) contains the statement you are required to provide.

This requirement applies to all real estate transactions except:

  • A residential lease of less than one year with no sale considered as part of the transaction or 
  • When a licensee meets a party who is represented by another licensee.

“Substantive dialogue” means a meeting or written communication involving a substantive discussion relating to specific real property but doesn’t apply to a meeting that occurs at an open house or a meeting or written communication that occurs after the parties have signed a contract or lease.

Read more legal FAQs on texasrealestate.com

Categories: Ethics, Forms, Legal
Tags: forms, real estate license act, legal, legal faq


Comments

Chip Staniswalis on 01/23/2015

Regarding “written statement”...
From the TAR answer to the original question above…“Yes. The Real Estate License Act requires licensees to provide a specific written statement about agency relationships to a party to a real estate transaction at the time you have the first substantive dialogue with that party.

From the TREC FAQ website:

Q:  Are licensees required to provide parties with written information relating to agency?

A:  Yes. A licensee is required to provide the parties with a copy of a written statement that contains statutory information relating to brokerage services at the first substantive dialogue with a client or prospect. The form of the statement may be varied, so long as the text of the statement is in at least 10 point type. [TRELA §1101.558].

Rick DeVoss on 01/23/2015

Well said, David.
Now, if we could all just start collecting a retainer fee before we begin showing houses, the true relationship between a ‘broker’ and a customer would improve greatly.
Even ladies of the night get paid up front!
Who was the first person who spread the rumor that real estate agents worked for free?

David Davis on 01/23/2015

@Rick DeVoss You are correct.  You only need to give the information (not necessarily the form).  However you must give all the information verbatim as it appears on the form.  You must also prove that you gave the information if ever TREC asks for such proof.  You are also correct (based on personal knowledge and experience) that simply having a copy of the form with notes indicating that the Broker gave the form to the consumer at a certain time on a certain date.  There is no requirement for the consumer to sign the form.  However, if after explaining the form, I cant convince the consumer to sign it, I am not going to spend any more time with them.

Rick DeVoss on 01/22/2015

@JK—-
I think you have missed an important point, and many other agents have, too.  The TREC directive says you have to give the information to the customer, Not the form.  There is no reason for the person to have a copy of it with his/her own signature on it.  The signature is for you to prove that you gave them the information, not the piece of paper.  Some people may not agree to sign the form, but you can still give them the required briefing.  Just note the date on your copy of the form, and write in that they declined to sign it.  You’ll be OK with that if you ever get asked.

Aleshia Sandel on 01/22/2015

I have made it part of my processes to send an IABS form to each prospective client to electronically sign through Docusign before substantial talk of real estate and explain that this is required by state.  I have never had any prospective client tell me they would not sign this form.

I also explain in my own words what this notice means and how it pertains to them whether as buyer or seller.

It is an easy process for me.

JK Toler on 01/22/2015

In my opinion, this form should be handled in a different manner.
I usually try to place a carbon copy for the prospect to have one
immediately, if meeting for the first time.  Most people don’t like
to sign legal docs without a copy.

cindy byers on 01/22/2015

I do furnish this form as needed and required….however…it would be much better if they took of the wording “voluntary” and add required.

Chip Staniswalis on 01/22/2015

TREC, generally, will not initiate an investigation on its own. A signed allegation is usually required. However, I have heard reports regarding circumstances where TREC’s Standards and Enforcement Services division (SES) can investigate rules violations without a signed complaint alleging non-compliance. For instance, a yard sign that does not comply with TREC advertising requirements; a picture of the yard sign sent to TREC could be considered prima facie evidence of the violation, and could be sent anonymously. If this is, in fact accurate, a resume containing inaccurate information regarding the agent’s misleading advertising could be sent without filing a formal complaint. In my opinion, inducing the public to believe a license holder has achieved a higher level of real estate experience than can be proven could also breach our Realtor Code of Ethics.

Dustin on 01/22/2015

Off topic slightly, so don’t burn me.  I’ll comment on topic at the end.  One other issue I have with commercial specific licensees, is that the entire field believes it is ok to call themselves brokers, even if they are salespersons, and even if they are brand new.  The “broker” declaration is everywhere, email signature lines, bio’s, facebook pages, their websites, linkedin profiles, everywhere, and yet, TREC does not enforce this issue one bit.  If one of my residential agents holding a salesperson license called themselves a broker or in any way implied they were responsible for brokerage activities, they would be violating TREC advertisement guidelines and would be disciplined and called on it.  The commercial field has been doing this for year.  They do hold the same license residential does, one license in this state, and yet, they can call themselves a broker 1 week into being licensed and nothing happens, ever.  Yet for me to do that I need 4 years of experience, have to take the brokerage class, pay for and pass the exam, pay for the license, and check off all mandated TREC criteria. Not commercial agents, they feel they are brokers because the industry calls them that. I read an impressive bio/resume for a licensee yesterday, and cross checked him on TREC, and noticed he just got licensed in November 2014, but yet all of his marketing and advertising call him a broker, and so did every bio for that brokerage, yet only 2 actual brokers existed in this firm.  Well known firm in Dallas, violating the law, and no one cares but me evidently.  I am a broker and worked hard for it, and must abide by licensing rules, when will TREC decide commercial licensees are no different than us and require they do the same???

As far as IABS disclosure, I too have it linked in my email, but after discussing with legal counsel, and TREC legal, just having the link and document in all emails in your signature line to go out automatically does not meet the requirement.  I keep it there anyway, but have been told it does not fulfill our requirements to deliver at first substantive contact or dialogue. There needs to be a better way to deliver this disclosure than emailing a pdf and having paper copies in your vehicle.

Rick DeVoss on 01/22/2015

People keep talking about posting a copy of the IABS document, or posting a ‘link’ to it, ...but have you really complied with the directive if you did not get the customer to SIGN the copy of the document?  ~How will you prove that you complied with the directive from TREC?
Does a “Substantive dialogue” include a detailed phone conversation?
Have our attorneys really investigated this topic in the field?  ...I mean…in the Real World?  ~There is the spirit of the law and there is the letter of the law.  Most agents don’t really know what to do, but they try to comply as best they can.  Only if you get nailed during the investigation of a complaint will you find out if you are doing it correctly.
God help our Brokers.

David Davis on 01/22/2015

I have had the attorneys at TREC repeatedly tell me that the link in the email is NOT sufficient.  You MUST attach the document to the email.  You should also explain the document to the recipient.  I use the statement that “There is a state required disclosure document attached to this email.  Please take a few minutes to read it, and if you have any questions, call me.”

Susanna Boyer on 01/22/2015

Chip - I have a link to the IABS in all of my emails as part of my signature.
I state that it is required by law.

“Texas Law Requires All Real Estate Licensees to Disclose Your Rights As A Buyer Or A Seller As It Relates To Representation. Please Click Link: Information About Brokerage Services”

Hope this helps.
Susanna

Chip Staniswalis on 01/16/2015

Since a “substantive dialogue” can be a written communication, like email or facebook, what have you found to be the easiest method of compliance re delivery of the specific written statement when using electronic or social media?

Judy McKee on 01/16/2015

Thank you TAR for this article. Most commercial brokers do not think these types of requirements both TRELA and NAR Code of Ethics apply to them. Please continue to give out this information. Thank you for your awareness of our responsibility as licensees in Texas and REALTORS!


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