Definitions:

afba = Affiliated Business Arrangement

The Parties:

Real Estate Broker A has a more than 1% ownership position in Title Company, and is the Owner/Managing Broker of the Real Estate Company A.

Real Estate Associate Broker A has no ownership or financial interest in Title Company, is an independent contractor of Real Estate Company A, and Real Estate Broker A is his managing Broker. He represents the Buyers as a Transaction Broker.

Real Estate Broker B has no ownership or financial interest in Title Company, and is the Owner/Managing Broker of Real Estate Company B. She rents office space from Real Estate Broker A, and also contracts with Real Estate Broker A for telephone, IT, email and other office administrative and support services, all at prevailing market rates. She represents the Sellers as the Listing Agent.

The Transaction:

Real Estate Broker B lists Seller’s property, and at the time of the listing, she refers Sellers to Title Company. No kickbacks or referral fees are paid for the referral. Closing Instructions are written and signed by Seller at the time of the listing, designating Title Company as their preferred holder of earnest money and settlement agent.

Real Estate Associate A shows his Buyers the Property listed by Real Estate Broker B, among many others, and his Buyers finally decide to make an offer on the Property. The offer is submitted, and during the negotiation process (a short sale), Seller’s Closing Instructions are presented to Buyers, who agree with Seller’s request to use Title Company for settlement services. Buyers had already selected and been pre-approved by their own Lender before hiring Real Estate Associate A, so no Lender referral is involved.

After counters are negotiated and accepted, and Seller's lender agrees to the short sale, the transaction proceeds and closes. Settlement service charges and title insurance rates and terms are actually better than several other alternatives evaluated by the Sellers and Buyers.

The Question:

Who, if anyone, is responsible for providing a RESPA afba Disclosure, to whom, and when and why?

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Ron Goodman, GRI, REALTOR®
Prudential Colorado Real Estate
Denver Colorado Real Estate: Highlands Ranch, Parker, Littleton, Castle Rock
Adwords for Real Estate: PPC Setup Services & Consulting

Holy crap dude... that's way too much to ask anyone other than an attorney.

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Aaron

Minneapolis Real Estate | Twin Cities Real Estate | Edina Realty Agent

Actually, not. If you are a real estate broker or agent, and your brokerage / company also does loans and/or has an affiliated title company, you have to really know this stuff, so you will know when it applies.

__________________
Ron Goodman, GRI, REALTOR®
Prudential Colorado Real Estate
Denver Colorado Real Estate: Highlands Ranch, Parker, Littleton, Castle Rock
Adwords for Real Estate: PPC Setup Services & Consulting