Who must disclose affiliated business arrangements prior to beginning a transaction?

The correct answer identifies the title insurer, agency, or agent as the entity responsible for disclosing affiliated business arrangements prior to commencing a transaction. This is an essential part of the regulations governing business practices in the real estate industry, particularly to prevent potential conflicts of interest and to ensure transparency.

The title insurer, agency, or agent must inform clients about any affiliations they might have with other businesses that provide settlement services, such as appraisal or mortgage services. This disclosure is critical because clients must be aware of any potential financial interests that might influence recommendations or decisions regarding their transactions. By ensuring that clients understand these relationships, the industry promotes fair practice and trust between consumers and professionals.

By contrast, other parties involved in the transaction, such as buyers, sellers, or appraisers, do not have the same obligation to disclose affiliated business arrangements in the same direct manner. While they may have their own obligations regarding honesty and transparency, the specific duty to disclose affiliations is placed firmly on the title insurer, agency, or agent, reflecting their role in facilitating the transaction and ensuring compliance with regulatory requirements.