AFFILIATED BUSINESS ARRANGEMENT DISCLOSURE –THE ABAD

Why the ABAD is a required RMAA Document

​RESPA (Real Estate Settlement Procedures Act) is a law passed by Congress in 1974 to curb unethical practices and consumer abuse in real estate settlement charges. Before RESPA, real estate professionals and closing service providers routinely abused consumers with unnecessary fees to close on their homes
Under RESPA, real estate firms and agents are required to disclose business arrangements which may result in fees or compensation to the real estate agent or brokerage. Whenever a real estate agent refers either a homeowner or buyer to a law firm, mortgage company or other associated settlement service, an affiliated business arrangement comes into existence. Therefore, a Disclosure Statement is required by law to be provided to and signed by the homeowner or buyer.  To stay in compliance with the law, RMAA requires that every brokerage agreement, whether with a buyer or a seller, include an ABAD.
RESPA contains provisions relating to prohibition against kickbacks and unearned fees. However, a referral that could result in fees is not prohibited if the person making each referral has provided to each person referred a written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement.
A “referral” of a law firm or lender or other service can be oral or written. It just has to have the effect of affirmatively influencing the selection by any person of a provider of a settlement service or business incident to or part of a settlement service.
Violations of RESPA can result in fines, penalties and in civil actions by individuals. The penalties for violating RESPA can be quite severe. At one time, the Consumer Financial Protection Bureau (CFPB) fined a mortgage lender, two real estate brokers, and a mortgage servicer almost $4 million in penalties and consumer relief.
There is liability for a violation of RESPA even if the proposed real estate transaction does not conclude. Therefore, the practice of providing disclosure at the time of initiating a brokerage relationship is critical.
The RMAA ABAD form can be located 2 ways.  It can be easily downloaded in Remine at the time brokerage agreements are accessed.  Simply choose the forms package RMAA 01 RE/MAX Around Atlanta.  The drop down includes the ABAD.  Select it and it will be one of your forms in the transaction. It is also in the RMAA Resource Library section of the RMAA Hub, in the Office Forms and Documents section as a stand-alone form.