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Code of Ethics and Standards of Practice
The REALTOR® Code of Ethics and Standards of Practice provide a pattern for successful business practice. Only members of the REALTOR® organization subscribe to high standards that build professional respect and trust. The National Association of REALTORS® Code and Standards provide the glue that holds together REALTORS® in every part of the nation.
Listings: Fair Play
When is it safe to step in on the sale?
Q: A seller I’d never spoken to before called me to list his house. He told me it had been listed with another salesperson, but he wasn’t working with her anymore. I checked the property status in the MLS, which showed the listing as withdrawn. When I asked the seller about his previous listing agreement, he told me he’d been released from that contract. I went ahead and listed the property. Now the original listing salesperson claims I violated the Code of Ethics. Did I?
A. No, you didn’t violate the Code. Although Standard of Practice 16-4 says you can’t solicit the exclusive listing of another REALTOR®, that isn’t what happened here. Instead, without either directly or indirectly initiating the discussion, you were contacted by the client of another REALTOR®. In such a case, Standard of Practice 16-6 permits you to discuss the listing with the client. “When REALTORS® are contacted by the client of another REALTOR® regarding the creation of an exclusive relationship…they may discuss the terms in which they may enter into an agreement.
You also did the right thing by checking the status of the listing in the MLS. Because you found that it had been “withdrawn” rather than “expired,” there was a question about whether the previous listing was still in effect. Standard of Practice 16-9 requires that before entering into an exclusive agreement with a client, a REALTOR® make reasonable efforts to determine whether the client is subject to an existing exclusive agreement with another broker. In asking about the previous listing and learning that the seller had been released, you fulfilled your ethical obligation. It’s also a good idea to ask to see the seller’s written release if the seller is willing to share it with you.
Q. Broker A had a nonexclusive listing for a large tract of undeveloped land. Even though Broker A had an interested buyer for the property, the owner decided to take the listing off the market. A short time later, the same buyer bought the property through Broker B, who’d listed the property exclusively and hadn’t submitted the property to the MLS. Would Broker A be entitled to any type of commission in an arbitration case against Broker B?
A. Under Article 17, an arbitrable dispute must be a contractual or a specific type of noncontractual dispute. In this case, there’s no contractual agreement between Broker A and Broker B. The property was never published in the MLS, and no offer of compensation was ever extended by Broker B to Broker A.
Nor does the situation meet any of the criteria for noncontractual disputes outlined in the standard. Most noncontractual disputes address issues of procuring cause between two cooperating brokers or between listing and buyer’s brokers.
For a noncontractual dispute to be arbitrated under the Code of Ethics, it must meet the criteria set down in Standard of Practice 17-4. Those criteria include disputes in which
- A listing broker compensates a cooperating broker, and another cooperating broker then claims to have been the procuring cause of the sale.
- A buyer’s rep is compensated by the buyer, and as a result, the listing broker reduces the commission owned by the seller.
Your dispute fails to meet either of these scenarios. In this situation Broker A’s only possible claim for compensation – if any – is against the seller under the terms of Broker A’s nonexclusive listing agreement. Broker A should contact his attorney about filing a lawsuit against the seller.
Questions answered by Bruce Aydt, ABR, CRB. He is a senior vice president and general counsel of Prudential Alliance, REALTORS®, in St. Louis, and a former chair of NAR’s Professional Standards Committee.
Reprinted from REALTOR® Magazine [July 2005] with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2005. All rights reserved.