Protecting Your Business with Disclosure of Beneficial Interest

Extending your real estate business into lending, title, or even referring to a spouse with a real estate-related business is perfectly fine—but disclosure is necessary to remain compliant with OREC's Code & Rules!

March 28th, 2023

Hi, I'm Jennifer Arsenault here with The Broker School. Today I want to talk with you about the Disclosure of Beneficial Interest.

Essentially, the licensing code says if you have a real estate license, whether you're a broker licensee or a sales associate licensee, that all licensees must disclose, in writing, to all parties, both the buyer and seller, if one you receive a fee—a commission, a salary, a rebate, kickback, or any compensation by recommending or referring any product or service.

This might come up if you've decided recently to become a loan officer. That's a fantastic way! It's not bad. You're helping people, right? In doing this, you are receiving some compensation, and when you receive compensation outside of the commission you've already negotiated, then you absolutely need to disclose this in writing to both the buyer and the seller.

Another idea might be that you own an interest in a business. Perhaps it's a title company or maybe your broker owns a title company, and you love to refer your clients there because they give great service. In doing this, you absolutely are required to disclose to both buyer and seller that there is an ownership interest, even if it's your broker's ownership interest. Your clients are their clients.

The Disclosure of Ownership Interest could also be in reference to maybe your spouse—maybe your spouse has a roofing company, and they do a fantastic job, so you recommend to your client who's selling their property to connect with your husband's roofing company. There's no wrong in that, and the thing that makes it right is when you disclose that ownership interest, in writing, to both the buyer and seller.

Maybe you don't own the roofing company; you're not a roofer, you're not climbing around on roofs and putting roofs on, but you do file taxes with your spouse. You do share a household, so there is an ownership interest, if you will, with that ancillary company.

So this is the form Disclosure of Beneficial Interest. It's a simple form it gets straight to the point and we do have it available for you to download as a PDF, and you can start using it right away. Happy disclosing!

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