Frequently Asked Questions
Compensation Disclosure to Buyer

Many REALTORS^® ask when they are to use the Compensation Disclosure to Buyer form and why there is a need to use it. Following are the reasons the Minnesota Association of REALTORS^® (MNAR) adopted this form and recommend its usage.

First, MN Statute 82.21, Subd. 1 requires real estate licensees to disclose in a Buyer Representation Agreement "the amount of compensation or commission or the basis for computing the compensation". MNAR has met this statutory requirement under the Compensation section of the Exclusive and Nonexclusive Right to Represent Buyer forms.

Under the Compensation section of these Buyer Representation forms, MNAR also included language that states, "Broker is authorized to negotiate and receive compensation paid by seller, or broker representing or assisting seller, if Broker tells Buyer in writing before Buyer signs an offer to Purchase the Property."

This language is placed in the Buyer Representation forms because the REALTOR^® Code of Ethics, Standard of Practice 1-13 states the following:

	"When entering into buyer/tenant agreements, REALTORS® must advise potential clients of:
1.	the REALTOR®'S company policies regarding cooperation;
2.	the amount of compensation to be paid by the client;
3.	the potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parties;
4.	any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g. listing broker, subagent, landlord's agent, etc.; and
5.	the possibility that sellers or sellers' representatives may not treat the existence, terms or conditions of offers as confidential unless confidentiality is required by law, regulation or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)"

Finally, brokers who have entered into representation contracts with clients owe the client fiduciary duties one of which is the fiduciary duty of Accounting. MN Statute 82.22, Subd. 4 states that "broker/salesperson will account to client(s) for all client(s)' money and property received as agent."

The MNAR adopted the Compensation Disclosure to Buyer form to assist REALTOR^® members in properly meeting these requirements.