During the course of a real estate transaction in California, buyers and sellers will send and receive many documents. Before you sign any real estate documents, be sure you understand the difference between a disclosure and an agreement.
The making known of a fact that had previously been hidden; a revelation.
When a party sends another party a disclosure for signature, your signature basically says, “I’ve received this information.” Your signature does not mean you agree with what is contained in the disclosure. You are simply acknowledging receipt.
For example, every real estate agent should give their client a copy of the Disclosure Regarding Real Estate Agency Relationship (C.A.R. Form AD). When you enter into a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand what type of agency relationship or representation you wish to have with the agent in the transaction. By signing this disclosure you are acknowledging receipt of the disclosure. It does not mean you are agreeing to any agency relationship with that agent.
Another name for a contract including all the elements of a legal contract: offer, acceptance, and consideration (payment or performance), based on specific terms.
When two parties enter into an agreement, then you are saying, “I agree to perform according to the terms in this agreement.” Your signature legally binds you to the terms set forth in the agreement. This is the main difference when comparing disclosures vs. agreements.
For example, when a buyer chooses to work with a real estate agent to facilitate the home search and contract negotiations, he/she will sign a Buyer Representation Agreement – Exclusive (C.A.R. Form BRE). Typically, this is a 90 day agreement between the two parties that allows the buyer to have an agent work exclusively for them in a fiduciary manner to protect the buyer’s interests. In exchange for the exclusive agency, the agent earns a commission at the close of escrow. The commission for the buyer’s agent comes from the seller, unless the buyer violates the terms of the Buyer Representation Agreement – Exclusive.