Sections 2079.24 through 2079.24 regulates the conduct of real estate brokers and their agents regarding agency disclosures and consent requirements. The California State Legislature passed Senate Bill 1171 in August 2014, amending the definition of "real property" to include "commercial property." This slight change, which took effect on January 1, 2015, subjects commercial real estate brokers to the same agency disclosures and consent obligations as residential brokers.

Under California law, a broker representing a party in a sale or a lease exceeding one year has to make certain disclosures about the nature of the representation and the duties owed to the client. Brokers must also deliver disclosures at certain points in the agency relationship and at specified occasions during the course of the transaction, and they must obtain a written acknowledgement from both parties of receipt of the disclosures forms.

The required disclosure form brokers must use is found in Section 2079.16 of the California Civil Code. This statute also requires that the text of the statute (Sections 2079.13 through 2079.24) be printed on the back of the disclosure form. The disclosure form must be delivered by a:

A second disclosure form is required under Section 2079.17 of the California Civil Code. This disclosure requires the broker to disclose the nature of the representation, stating whether the agent represents:

Prior to this legislation, commercial real estate brokers acting as dual agents were not required to obtain written consent from the parties based on the theory that sophisticated parties in a commercial transaction do not need the same protection as the parties in a residential real estate transaction. In addition, a dual agent cannot, without the express written consent of the affected party, disclose to the:

The disclosure and consent rules regarding dual representation are troubling for large commercial real estate brokerage firms in situations where its agents separately represent both parties in a transaction, creating the potential for breaches of fiduciary duties owed by the brokerage firm to its clients. Brokerage firms, individual agents and their counsel are seeking guidance from the courts before the January 1, 2015, effective date. Commercial real estate brokerage firms and their counsel are monitoring the California Supreme Court's upcoming review of Horiike v. Coldwell Banker Residential Brokerage Co., which deals with the issue of fiduciary duties in a dual representation in a residential context (169 Cal. Rptr. 3d 891 (Ct. App. 2014)).

California brokerage firms, individual commercial brokers and their counsel should update their standard forms to reflect these new disclosure standards and consult the statutes for additional rules.