Here’s a full list of possible questions real estate agents might ask their broker about the Loan Broker–Sales Broker Disclosure form, along with clear explanations for each.

Loan Broker–Sales Broker Disclosure: Questions and Explanations

1. What is the purpose of the Loan Broker–Sales Broker Disclosure?
   It explains when a real estate broker is acting both as a sales broker (representing a buyer or seller in a property transaction) and as a loan broker (arranging financing for the transaction). The disclosure is required to ensure transparency about the broker’s dual role and potential conflicts of interest.
2. When is this disclosure required?
   The disclosure must be provided when the broker is performing both roles in the same transaction: helping with the property sale/purchase and also arranging or negotiating financing. This is a legal requirement under California law.
3. Who needs to sign the disclosure?
   The client(s)—whether buyer, seller, or borrower—must sign to acknowledge that they understand the broker is acting in both capacities. This protects the broker by showing that the client was informed of the dual role.
4. Does this create a conflict of interest?
   Yes, potentially. The law recognizes that acting as both sales broker and loan broker could create conflicting incentives. That’s why the disclosure is required—to make sure clients are fully informed and consent to the arrangement.
5. What happens if the disclosure is not provided?
   Failure to provide it can result in disciplinary action by the California Department of Real Estate (DRE), legal liability, and potential rescission of commissions or loan fees earned. It can also damage trust with the client.
6. Does this disclosure affect commission or compensation?
   It does not change the commission or fees directly, but it clarifies that the broker may be earning compensation in two ways: from the real estate sale and from the loan transaction. Clients must be aware of this.
7. Is this the same as dual agency disclosure?
   No. Dual agency disclosure applies when one broker represents both the buyer and the seller in the same property transaction. The Loan Broker–Sales Broker Disclosure applies specifically to situations where the broker is handling both the sale and the financing.
8. Does the disclosure apply if the broker only refers the client to a lender?
   Not usually. If the broker is simply referring the client to a lender without brokering the loan, the disclosure may not be required. It applies when the broker is directly involved in arranging or negotiating the financing.
9. Do I need to explain this form to my client?
   Yes. While the form itself is straightforward, brokers and agents should explain why the disclosure is required, what it means for the client, and how it affects the transaction. This builds transparency and trust.
10. How should I present this disclosure to my client?
    It should be provided early in the transaction, ideally at the time the client agrees to let the broker handle the financing. It should be explained clearly and signed before proceeding with the loan arrangement.
11. Does this disclosure apply to commercial and residential transactions?
    Yes, the requirement applies to both residential and commercial real estate when the broker is acting in both sales and loan capacities.
12. What if the client refuses to sign the disclosure?
    If a client refuses, the broker should not act as both sales and loan broker in that transaction. Proceeding without consent exposes the broker to legal and regulatory risks.