Broker James represents buyer Angela as a client in Washington. Angela is purchasing a home and has asked James to recommend a home inspector. James has a referral arrangement with Inspector Bob under which James receives $150 for each referral. Under RCW 18.86, what must James do before recommending Bob to Angela?
Correct Answer
D) James must disclose the referral arrangement to Angela so she can make an informed decision
Under RCW 18.86.040(1)(b), a broker representing a buyer as a client owes the duty of disclosure, which includes disclosing any conflicts of interest or financial arrangements that could affect the broker's advice. James's referral fee arrangement with Inspector Bob is a material conflict of interest that could influence his recommendation. He must disclose this arrangement to Angela so she can make an informed, independent decision about whether to use Bob.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
The fiduciary obligations owed by a listing agent to the seller, including marketing the property, presenting all offers, and protecting the seller's confidential information.
A practice where the agent or brokerage represents only one party in a transaction — either the buyer or the seller, but never both.
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