Effective October 14, 2008 Compensation Rule Changes Approved

Beginning October 1, real estate brokers are required to disclose to their clients any incentive, bonus, rebate, or other compensation (of more than nominal value) which is offered to them by some other person or party.

You must make the disclosure in sufficient time to aid your client’s decision-making (ideally before you show a buyer-client a property for which an incentive is being offered).

If you choose to initially disclose the incentive orally (rather than in writing), you must then confirm it in writing before your client makes or accepts an offer to buy or sell.

The disclosure must simply state the amount (or describe the value) of the incentive and who is offering it to you.

NOTE: The requirement applies to all sales transactions (both residential and non-residential) but not to lease or other transactions.  You’re not required to tell anyone other than your client the compensation you expect to receive in a transaction, nor are you required to tell your client the amount of compensation you expect to receive from your employing broker (company).  

You can find on the Commission’s website Rule A.0109 (Brokerage Fees and Compensation) containing the recent amendments.  You will also receive a detailed explanation of the changes in your 2008-2009 continuing education Update Course.

This article came from the October 2008-Vol39-2 edition of the bulletin.