Or is this something to be negotiated with the players, like, "Pete, you have a brother here, does that sound ok?"

Or do you wait until the players want to declare that they have a relative in the town, like "James, can my sister live here"?

Is it okay? Why, it's almost required!

No, there's no need to negotiate with the players upfront, nor wait till they ask. Just put them there.
Remember, there's no requirement that the Dogs have to like the family members, so, really, there's no problem here.
When you introduce the family member, it can be worthwhile to negotiate some of the details about their mutual background - how the Dog related to the family member as a child, and whatnot. But then again, if the Dog is well-defined enough (or you know the player well enough), you can probably draw on what you know of him/her, and choose something reasonable before play.
After all, an earlier relationship is in the past, probably from when the dog was not a dog. The player isn't bound to have his dog continue acting in the way you describe the past relationship being. In fact, one of the fun things that can be done with family relationships is creating juxtapositions: "I am not now who I was then." But this comes about quite naturally and without deliberately striving for it.

I'm rambling now, so I'll refer you back to my second and third sentences.

The really short answer: heck yes!
Family members are Flags. So use them!

No discussion is required unless you think it appropriate or necessary for some reason, and it doesn't stop them from asking themselves if they can have the character in the scene (or depending on how much directoral freedom the players are given, just dropping the character in themselves when they feel it is appropriate).

One thing I like about Dogs is that it gets away from those multi-page background stories where the player tries to set the stage for the entire game to eliminate any chance of conflict he doesn't want to have. The GM is totally responsible for the NPCs, and is only constrained by the outcomes of actual play. Of course the GM should honor players desires, but conversely, players shouldn't put too many constraints on the GM.

Frank

Yeah, the way I do it is, during town prep, work out who is a blood relative of a Dog. ("The Steward is a uncle to one of the Dogs. The corrupt farmer is a cousin of one of the Dogs." kinda thing).

Then, before we start the town, I tell my players; "Tower Creek is next on your list of towns to visit. One of you knows that your uncle is the Steward. One of you has a cousin who moved out here with his wife..." and so on. They players can then pick who gets what (blood) relation.

As it turns out, then I asked the players about their families, one player "raised the shields" and declared "My family is all over seas. I don't have any relatives here!"

I'm not sure if this was a defensive move to prevent me, the evil GM from hosing him with the old Hero classic of threatening dependent NPCs. I'm fairly sure it was. It was irritating. Irritating like the other player who decided that EVERY Belonging was Big and Excellent.

The other active player just said "I'm an only child" which left things open for aunts, uncles, and cousins. For the next town, I'm going to use that line of advice about opening with "You know your uncle is the Steward...".

Thanks!

Two things:
1) I think almost every Town example--if not all--in the rules have family members of the Dogs as NPCs. I am thinking it's OK according to the Rules As Written. ;-)
2) There is a certain advantage to the players, when a family member is in the Town; and as such, "putting up the shields" is a way to hamstring oneself--let them.
(Recall that a family member is an automatic 1d6 Relationship, unless more or higher--or lower--dice are already assigned to it.)

I say add family as NPCs at will and then, during Reflection, use any body language cues or overt complaints as indicators that you should dial back to the expectations of the strictest player (this advice is also straight from the R.A.W.).

Hope this helps;
David

David,

Yup, of course getting that extra 1d6 is a bonus. I'm guessing at this player's reason to declare that there would be no chance they would have a relative in the game. Given this player (Pete) also was the one to constantly question the rules in a way that reflected his distaste for the game, I'm led to conclude they simply do not want to play. The decision not to have any relative available for inclusion was probably a way of limiting their involvement.

Surprisingly, he was also the one who, unprompted, shot the Steward as a way of pronouncing judgment. The other player, Jon, initially balked, but then realized that it had to be done. It surprised me in a pleasant way - a sort of validation that the game was generating unexpected and pleasurable results.

I think I've got my answers, so this thread is done. If anyone has any comments or questions about what our play was like, let's fire up another thread.