What are the conditions that trigger a RESPA Affiliated Business Arrangement disclosure?

What are the conditions that trigger a RESPA Affiliated Business Arrangement disclosure?

• A. Ownership less than 1% and a financial interest
• B. Greater than 1% ownership and an associate relationship
• C. Less than 1% ownership and non-associate relationships
• D. Ownership of exactly 1%

Answer: (B)

The correct answer is based on the requirements set forth by the Real Estate Settlement Procedures Act (RESPA) regarding affiliated business arrangements (ABAs). Specifically, RESPA mandates that a disclosure is required when there is greater than 1% ownership in a settlement service provider and there is an associated relationship between the parties involved. An associated relationship implies that there is a common ownership or control, or other ties that would allow for influence over the business operations of the settlement service provider. When such conditions are met, the parties are required to provide a disclosure to ensure transparency in the transactions that may potentially benefit from such affiliations. The significance of this requirement is to protect consumers by informing them about the financial interests that might affect their choices and the costs associated with their real estate transactions. The other choices do not meet the established criteria for triggering the disclosure under RESPA. For instance, ownership of less than 1% does not necessitate disclosure, nor does it hold the same weight if there is no significant ownership interest or connection in the relationships involved.

The correct answer is based on the requirements set forth by the Real Estate Settlement Procedures Act (RESPA) regarding affiliated business arrangements (ABAs). Specifically, RESPA mandates that a disclosure is required when there is greater than 1% ownership in a settlement service provider and there is an associated relationship between the parties involved. An associated relationship implies that there is a common ownership or control, or other ties that would allow for influence over the business operations of the settlement service provider.

When such conditions are met, the parties are required to provide a disclosure to ensure transparency in the transactions that may potentially benefit from such affiliations. The significance of this requirement is to protect consumers by informing them about the financial interests that might affect their choices and the costs associated with their real estate transactions.

The other choices do not meet the established criteria for triggering the disclosure under RESPA. For instance, ownership of less than 1% does not necessitate disclosure, nor does it hold the same weight if there is no significant ownership interest or connection in the relationships involved.