2.2 Disclosure of Real Estate Brokerage Relationships

The Statutory Mandate: S.C. Code 40-57-370

S.C. Code Section 40-57-370 requires every licensee to provide a written Disclosure of Real Estate Brokerage Relationships to consumers at first substantive contact. The South Carolina REALTORS standard form is SCR110, but the legal duty is the statute, not the brand of paper. This disclosure is informational only — it is not a contract and does not create an agency relationship. It simply explains the relationship options so the consumer can make an informed choice later.

Distinguish two documents that candidates confuse:

What Is "First Substantive Contact"?

First substantive contact is the point at which the conversation moves beyond general small talk into the consumer's specific needs, finances, or motivation — the moment before confidential information would naturally be exchanged. The disclosure must be on the table before that line is crossed.

Worked scenario: A buyer walks into an open house and immediately says, "We're relocating and have to be in by August — what's the lowest the seller will go?" The licensee must pause and present the disclosure before engaging that question, because the buyer is about to reveal motivation and ask for representation-type advice while still legally a customer.

Key trap: Showing the disclosure at closing, or after the buyer has already shared confidential financial details, is too late and is a license-law violation even if no one was harmed.

Signature Rules: Who Must Sign

The consumer's signature is acknowledgment of receipt, not consent to any relationship. Because it documents that the disclosure was actually delivered, best practice is to obtain it; if the consumer declines, the licensee records the refusal so the file shows the duty was met.

Contents of the Disclosure Form

The Disclosure of Real Estate Brokerage Relationships explains, in plain language, each relationship option from Section 2.1:

The form also defines key terms (brokerage firm, client, customer, dual agent, designated agent) and lists the duties owed under each option, so the consumer understands what changes when they sign an agency agreement.

Company Agency Policy

Beyond the state form, each brokerage adopts a written company agency policy that states which relationships the firm offers. A firm may, for example, prohibit dual agency entirely or practice only designated agency for in-house deals. The broker-in-charge enforces this policy, trains licensees to follow it, and is ultimately responsible for the firm's compliance with the disclosure duty.

Disclosure vs. the Agency Agreement: Sequence on the Exam

Candidates lose points by collapsing two separate steps. The exam tests them as a sequence:

1. First substantive contact -> deliver the Disclosure of Real Estate Brokerage Relationships (informational; creates nothing).
2. The consumer decides whether to be represented.
3. If they choose representation -> sign a written agency agreement (buyer-agency or listing agreement) that creates the client relationship.
4. If an in-house conflict later arises -> obtain written designated-agency or dual-agency consent.

Worked scenario: A licensee gives the disclosure at an open house, the visitor later decides to be represented, and they sign a buyer-agency agreement that evening. The disclosure satisfied 40-57-370; the buyer-agency agreement is what converted the visitor from customer to client. Skipping the disclosure but signing the agency agreement still violates the statute, because the timing duty attaches at first substantive contact, not at signing.

Exceptions to the Disclosure Duty

The disclosure requirement targets consumers in a brokerage relationship context. It does not apply to ordinary contacts that are not substantive — a quick "is this house still available?" call, or interactions where the licensee is a principal acting for their own account rather than offering brokerage services. When in doubt, the safe practice is to provide the disclosure: over-delivering is never a violation, but under-delivering is.

Consequences of Non-Disclosure

Exam tip: The disclosure must go to all consumers in all capacities — buyers, sellers, landlords, and tenants — at first substantive contact. The licensee signs; the consumer's signature is optional acknowledgment of receipt only.