In a scenario where a broker has a financial interest in a service company used for managed properties, what action must occur?

• A. Disclose the interest and obtain the owners' written permission to use the company
• B. Proceed without disclosure
• C. Sell the service company
• D. Obtain approval from tenants

Answer: (A)

When a broker has a financial stake in a service company used for managing properties, there is a potential conflict of interest. The broker must disclose that interest to the property owners and obtain their written consent to use that company. This protects the owners, preserves the fiduciary duty of loyalty and care, and ensures decisions are made with full transparency rather than for the broker’s personal gain. Proceeding without disclosure would violate those duties, and selling the service company or seeking tenants’ approval isn’t the required action—the owners are the clients who must be informed and approve the arrangement.