BUSINESS BROKER Businessteam

CaliforniaAssociation ofBusinessBrokers ProfessionalService since1987

AgencyDisclosureandAgreement

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BUSINESS BROKER BusinessTeam

Agency andDualAgency:Onthereverseofthisformis printedaportionofCaliforniaCivilCodesection2079.16,whichrequiresdisclosure ofsomeconceptsanddefinitionsconcerningtherelationshipbetweenaprincipalandanagentinthesaleofcertainresidentialrealestate.Whilethelistingandsaleofabusinessisnotatransaction requiringtheuseoftheformprescribedbythatCodesection,theinformation providediscompletelyapplicabletothebusinesssalecontextaswell,andyouarerequestedtoreaditcarefullyandacknowledgethatyou have beenadvisedofitscontents.

Whenabrokerlistsabusinessforsale,thebrokerbecomesan“agent”representingtheseller.Thesame brokeralsooftenworkswith prospectivebuyers,andbythenatureofthatrelationship,becomesabuyer’sagentaswell;thisiscalled“dualagency.”Althoughabuyerandselleraresometimesrepresentedbydifferentagentsofthesamebrokeragefirm,thisisalsoadualagency,becausethebrokerwhoemploys each ofthe agents isreallytheagentforbothparties.

FullDisclosure:UnderCalifornialaw, thebuyerandthesellerofa business areeachrequired tofully andfairlydisclosetotheother,anyand allinformationwhichisknowntothatparty,orreasonablyshouldbeknown,andwhichmayorwillbe“material”totheotherparty’sdecisiontoenterintothetransaction.Anagentmustfully discloseallrelevantinformationknowntotheagenttothepartyorpartiesthattheagent represents.Anagent,whetheractingonlyforoneparty,orasadualagent,mustmakethesamesuchdisclosurestotheotherparty,ortothe otherparty’sagent,andcannotwithholdanymaterialinformationwhichsuchagentmayknow, orintheexerciseofreasonablediligence,shoulddiscover.

PriceandValuation:There isanexceptiontotherulethatadualagentmust discloseallinformationinhisorherpossession.Inrepresenting bothsellerandbuyer,theagentshallnot,withouttheexpresspermissionoftherespectiveparty,disclosetotheotherpartythatthesellerwillacceptapricelessthantheaskingprice orthatthebuyerwillpayapricegreaterthanthepriceoffered,eventhoughthereotherwisemightbea dutytodoso.Likewise,abrokeractingasadualagentwillnotdisclosevaluationsorappraisalspreparedby the brokerfortheseller(butmustdiscloseanycomparablesalesfigureswhichmayhavebeenamajorfactorinsuchevaluation),northecontentsofanypreviousnegotiations, contractsoroffersbetweeneitherthebuyerorsellerandany otherparties.Thisistheonly waynegotiationscanbeconductedwhenthebroker representsboththebuyer andtheseller.

AcknowledgmentofDisclosureandAgreement toDualAgency:Eachparty, by signingbelow,acknowledgesandagreesthat:

1.Thepartyhascarefullyreadandfullyunderstandsthemattersdiscussedabove,aswellasthelanguageofthestatutequotedonthe reverseofthisform, andhashadtheopportunity toaskquestionsand/ortoseektheadviceof legalcounselpriortosigningbelow.

2.TheSellerconsentsandagreesthattheBrokerrepresentingsaidpartymay,inhisdiscretion,actasanagentforanybuyerorprospective buyer aswellasfortheSeller, asexplained aboveand onthe reverse hereof,andagreestotheconditionsstatedabove.

3.TheBuyerconsentsandagreesthattheBrokerrepresentingtheSellerwillcontinuetodosoeventhoughsaidBrokerwillalsorepresentthe Buyer asadual agent,understandsalloftheinformation stated aboveand onthereversehereofandconsentstosuchdualagency.

THISFORM MAYBESIGNEDINCOUNTERPARTS.NOTALLSIGNATURESAREREQUIREDTOAPPEARONTHESAMECOPY.FACSIMILESIGNATURES AREACCEPTABLEANDBINDING.

SELLERS(S):

BUYER(S):

SignatureDate

Name(print)

SignatureDate

Name(print)

AgentforSellerDate

Broker’sAgentDate

Excerptfrom CALIFORNIA CIVIL CODE§ 2079.16page2 of2

SELLER'SAGENT:Whenyouenterintoadiscussionwitharealestateagentregardingarealestatetransaction,youshouldfromtheoutsetunderstandwhat typeofagencyrelationshiporrepresentationyouwishtohavewiththeagentinthetransaction.

ASeller'sagentunderalistingagreementwiththeSelleractsastheagentfortheSelleronly.ASeller'sagentorasubagentofthatagenthasthefollowingaffirmativeobligations:

To theSeller:Afiduciarydutyofutmostcare,integrity,honesty,andloyaltyindealingswiththeSeller.TotheBuyerandtheSeller:

(a) Diligentexerciseofreasonableskillandcareinperformanceoftheagent'sduties.(b) Adutyofhonestandfairdealingandgoodfaith.

(c) Adutytodiscloseallfactsknowntotheagentmateriallyaffectingthevalueordesirabilityofthepropertythatarenotknownto,orwithinthediligentattentionandobservationof,theparties.

BUYER'SAGENT:Anagentisnotobligatedtorevealtoeitherpartyanyconfidentialinformationobtainedfromtheotherpartythatdoesnotinvolvetheaffirmativedutiessetforthabove.

Asellingagentcan,withaBuyer'sconsent,agreetoactasagentfortheBuyeronly.Inthesesituations,theagentisnottheSeller'sagent,evenifbyagreementtheagentmayreceivecompensationforservicesrendered,eitherinfullorinpartfromtheSeller.AnagentactingonlyforaBuyerhasthefollowingaffirmativeobligations:

TotheBuyer:Afiduciarydutyofutmostcare,integrity,honesty,andloyaltyindealingswiththeBuyer.TotheBuyerandtheSeller:

(a) Diligentexerciseofreasonableskillandcareinperformanceoftheagent'sduties.(b) Adutyofhonestandfairdealingandgoodfaith.

(c) Adutytodiscloseallfactsknowntotheagentmateriallyaffectingthevalueordesirabilityofthepropertythatarenotknownto,orwithinthediligentattentionandobservationof,theparties.Anagentisnotobligated torevealtoeitherpartyanyconfidential informationobtainedfromtheotherpartythatdoesnotinvolvetheaffirmativedutiessetforthabove.

AGENTREPRESENTINGBOTHSELLERANDBUYER:Arealestateagent,eitheractingdirectlyorthroughoneormoreassociatelicensees,canlegallybetheagentofboththeSellerandtheBuyerinatransaction,butonlywiththeknowledgeandconsentofboth theSellerandtheBuyer.Inadualagencysituation,theagenthasthefollowingaffirmativeobligationstoboththeSellerandtheBuyer:

(a) Afiduciarydutyofutmostcare,integrity,honesty,andloyaltyinthedealingswitheitherSellerortheBuyer.(b) OtherdutiestotheSellerandtheBuyerasstatedaboveintheirrespectivesections.

InrepresentingbothSellerandBuyer,theagentmaynot,without theexpresspermissionoftherespectiveparty,disclosetotheotherpartythattheSellerwillacceptapricelessthanthelistingpriceorthattheBuyerwillpayapricegreaterthanthepriceoffered.

The abovedutiesoftheagentinarealestatetransaction donotrelieveaSellerorBuyerfromtheresponsibilitytoprotecthisorherowninterests.Youshouldcarefullyreadallagreementstoassurethattheyadequatelyexpressyourunderstandingofthetransaction. Arealestateagentisapersonqualifiedtoadviseaboutrealestate.Iflegalortaxadviceisdesired,consultacompetentprofessional.

BUSINESSNAME

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