Buyers and Sellers protected by Ohio’s Improved Disclosure Laws

Many buyers and sellers are unaware of the most recent changes in the disclosure laws affecting the conduct of Real Estate Agents and Sellers.  The old cumbersome Agency Disclosure Form is out and the new Consumer Guide to Agency is in. Ohio Agents are now required by the Ohio Division of Real Estate Licensing Law to present a Consumer

Guide to Agency to a buyer or a seller at the “first substantive meeting”.  This means, in plain language, before showing a property to a prospective buyer or even before discussing the Buyer’s financial information, such as price range, qualifications to purchase, and various mortgage options available to meet the theirs needs with the Buyer. The only exception to this requirement is when a showing takes place at an Open House.

The Real Estate Agent is required by law to be able to prove that the Consumer Guide to Agency was presented to the prospect.  Usually the buyer is asked to acknowledge that they received the Guide by simply signing a receipt.  In the event that the buyer does not feel comfortable signing a receipt acknowledging that the agent is in compliance with the law, the agent must fill out the receipt anyway with the time and date of presentation and the reason the buyer did not sign it. It helps if the Buyer will initial that information.  In either case, documentation that the agent presented this Consumer Guide must be kept on file in the office for a period of three years.  This is an improvement over the prior system Real Estate professionals had to deal with which required the buyer to sign an agency disclosure form that was seen by buyers as an agreement to an agency relationship before they were ready to establish such a relationship. 

The same Consumer Guide to Agency must also be presented to a Seller at the first substantive meeting.  Usually this means the first time the agent goes to a Sellers house or sits down with a Seller to discuss listing the house.  The same rules apply to the Real Estate Agent when working with Sellers as when working with buyers. They must document proof of presentation.

 Penalties for failure to present the Consumer Guide to Agency can be severe including  fines, additional continuing education or suspension of the agent’s license to sell Real Estate.

The actual Agency Disclosure Form required by the Ohio Division of Real Estate has been improved and is now reserved for the time when a buyer has selected a property and writes an offer to purchase.  This Agency Disclosure specifies the property involved, the buyer agent’s role and the listing agent’s role.  It also covers which Real Estate firms are

involved and whether there is more than one agent involved.  If the same agent represents both the seller as the listing agent and the buyer as the selling agent then the form makes it clear to all parties that a dual agency agreement exists.  Since Sellers expect their listing agent to bring them a buyer, they are usually a little more prepared for a dual agency situation that a buyer.  This is one of the reasons the Consumer Guide to Agency is such a valuable tool for  Buyers.  They know up front what their options are before they get to the purchase agreement stage. 

Buyers are further protected by the recent changes in Residential Property Disclosure Laws.  When selling a property all property owners are now required to present a four page disclosure on the condition of the property whether they are selling it through a real estate agent or by themselves. This Disclosure includes any environmental or zoning issues affecting the property such as flood plains, drainage problems, shared driveway agreements, assessments, school district changes etc. Buyers should ask for this disclosure on any property they are interested in buying.

 There are some exceptions to this disclosure law which primarily concern properties that are being sold by someone other than the owner/occupant, as in an estate settlement, inherited property, or property sold by a guardian.   Although of immense help to a buyer when determining a choice to purchase or not, the property disclosure is not meant to take the place of a whole house inspection.  Buyers are still responsible for doing their own thorough inspection of the property they want to buy. 

Knowing your right to receive disclosures can make the buying and selling process much easier for both buyers and sellers.