Informed Consumers · Training


Virginia Agency Disclosure

We discussed in previous chapters that Virginia Law requires Licensees, both Agency and non-Agency, make certain Disclosures to Clients and Customers.  Now that we have an understanding of the different types of Agency relationships, Duties, Brokerage agreements, let’s discuss how to apply what we’ve learned to Virginia Licensee Disclosure requirements.

Remember that the Brokerage relationship is between the Client and the Principle Broker.  While the Principle Broker is primarily responsible for ensuring compliance with Agency obligations, the Licensee is also responsible, and both could face VREB disciplinary action for failure to comply.

Working towards agency compliance


What Requires Disclosure

The following would require written and consented Disclosure:

  • The parties with whom the Licensee has a brokerage relationship;
  • If a licensee desires a Dual or Designated Agency relationship;
  • When a licensee has an interest in the transaction;
  • The rights and obligations of the Seller under the Virginia Residential Property Disclosure Act;
  • The rights and obligations of the Seller of a condominium to deliver to the Buyer, or to receive as Buyer, the condominium resale certificate; and
  • The rights and obligations of the Seller of a property subject to the Property Owners’ Association Act, to deliver to the Buyer, or to receive as Buyer, the Association Disclosure packet.

Also remember, that Licensees who elect to become members of the REALTOR Associations must also adhere to Association rules and regulations.  Article 9 of the National Association of REALTORS Code of Ethics listed below is just such example:

“Realtors®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing.

When Agency Disclosure is Due

As we learned in earlier chapters the Agency relationship commences at the time that a Client engages a Licensee and requires the mutual written agreement of the firm and Client.  Therefore, the Client is informed about the terms of their Agency relationship very early on through the Brokerage Agreement.

Under HB 1907, when the Licensee is required to give Brokerage relationship Disclosures to prospective Customers or to current Clients when their path crosses with another Client, does not change.

Virginia law states that a Licensee must Disclose any Brokerage relationship that exists upon having a “substantive discussion” about a specific property with any prospective party to the transaction.

Let’s understand “substantive discussion” before we continue.

Substantive Discussion

So what exactly is Substantive?  The term is loosely defined as “not imaginary”, and therefore creates the opportunity for interpretation.  Good judgment on the agent’s part must be exercised.  Just remember, Disclosure must be made in writing at the earliest practical time, and must occur before any specific real estate services are provided.

VAR suggests the follow key points when determining substantive:

  • Pricing questions
  • Motivation
  • Repairs/property condition

They also provided the below conversation example regarding what would be considered Substantive Discussion and therefore trigger Disclosure:

“You’re a listing agent who has entered into a brokerage relationship – a ratified listing agreement – with Mr. and Mrs. Seller. You hold an open house at the Sellers’ property. Mr. and Mrs. Buyer attend the open house, express that they are actively seeking to purchase a home, and ask you several substantive questions about the property. A typical conversation might be one where Mr. and Mrs. Buyer begin discussing the paint color in the living room – not a substantive conversation that requires any disclosure – and then transition quickly to asking you questions about whether the Sellers might agree to paint the walls or come down on the price. At this point, you ask the Buyers whether they’re represented by an agent. They are not.

 This is when you must stop the conversation and provide Mr. and Mrs. Buyer with written disclosure of your brokerage relationship with the sellers. In fact, you should have arrived at the open house with completed copies of a disclosure of brokerage relationship, indicating clearly that you represent Mr. and Mrs. Seller.”


Author: Lee Gosselin, Associate Broker & Owner

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