Transfer of agents
A seller reached out to Agent B to explain his unhappiness with his current listing agent, Agent A. The seller acknowledged that his house is listed with Agent A, and Agent B confirmed that the property is currently listed on the MLS. The seller asked Agent B how to expire the listing and change agents. What can, and can’t, Agent B say to the seller?
Agent B should refrain from commenting on the seller’s listing contract or relationship with Agent A. Article 16 of the Code of Ethics prohibits REALTORS® from engaging in any practice or taking any action inconsistent with exclusive representation that another REALTOR® has with a client.
A licensee who coaches a seller about how to terminate a listing agreement or comments on the enforceability of another broker’s agency agreement may be accused of license law and ethical violations and sued in court for damages. Such conduct may be viewed as giving legal advice in violation of Wis. Admin. Code § REEB 24.06(1) and Article 13 of the Code of Ethics. It also may be seen as interference with the other broker/company’s agency contract in violation of Article 16 of the Code of Ethics. A person who interferes with a contract may also be sued in civil court for interference with contract if damages can be proven.
The seller may be referred to Agent A or Agent A’s broker and legal counsel to discuss what options may be available to the seller regarding the current listing.
Article 16 states:
REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients. (Amended 1/04)
Article 13 of the REALTOR® Code of Ethics provides:
REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.
Because the seller initiated the inquiry, the agent may discuss the terms and conditions upon which the agent may work with the seller in the future. Agent B may invite the seller to contact the firm once he has resolved the relationship with Firm A. Then Agent B may enter into a new listing with the seller.
Standard of Practice 16-6 provides:
When REALTORS® are contacted by the client of another REALTOR® regarding the creation of an exclusive relationship to provide the same type of service, and REALTORS® have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement. (Amended 1/98)
Complaints
The seller previously described thinks Agent A violated license law or the REALTOR® Code of Ethics. What options are available to the seller? How can the seller find resolution if there are issues? How can the seller file a complaint against an agent?
Depending on the alleged offense, the seller may have options, which include filing a complaint with the local REALTOR® association, filing a complaint with the Real Estate Examining Board (REEB) of the Department of Safety and Professional Services (DSPS), filing litigation or filing a complaint with another regulatory agency.
If the conduct is a potential violation of the Code of Ethics, any person, whether a REALTOR® member or not, may contact the local REALTOR® association of the REALTOR®. The association will provide information about professional standards services including REALTOR® ombudsman, mediation and ethics hearings.
Each association offers free, voluntary alternative dispute services including ombudsman and mediation. For more information about the ombudsman program and processes, see “New Professional Standards Tool For You” in the June 2015 Wisconsin Real Estate Magazine at www.wra.org/WREM/June15/Ombudsman.
If the alternative dispute services are unsuccessful, the person may file a written complaint with the Professional Standards Administrator of the local REALTOR® association. A complaint will include a statement summarizing the facts upon which the complaint is based. The complaint must be filed within 180 days after the facts constituting the matter complained of could have been known in the exercise of reasonable diligence or within 180 days after the conclusion of the transaction or event, whichever is later. A REALTOR® found in violation of the Code of Ethics will be subject to disciplinary action as authorized by the Code of Ethics and Arbitration Manual.
For more information about filing an ethics complaint with the local REALTOR® association, see the National Association of REALTORS®’ brochure, “Before You File an Ethics Complaint,” at www.nar.realtor/about-nar/governing-documents/code-of-ethics/brochure-before-you-file-an-ethics-complaint. To find the local association, visit www.nar.realtor/rofindrealtor.nsf/pages/FS_FREALTOR?OpenDocument.
Either a party to a transaction or a licensee may complain to the DSPS about another licensee who may have violated license law. A complaint may be submitted online to the DSPS. Complaints are processed by the Division of Legal Services and Compliance. Complaint forms and an overview of the process can be found at dsps.wi.gov/Pages/SelfService/FileAComplaint.aspx.
Listing termination
If the same seller, described previously, contacts Agent A about terminating the listing, how would Agent A respond to the seller’s request to terminate a listing prior to the end of the term?
There at least four general ways in which the listing firm might choose to work with a seller regarding the seller’s request to terminate an existing WB listing agreement:
- Work with the seller to address the seller’s concerns and maintain the contract.
- Agree to a WB-45 Cancellation Agreement and Mutual Release, if the broker is willing to release all interest in the contract. A broker wishing to retain rights for protected buyers would not use this method.
- Use a WB-42 Amendment to Listing Agreement, which would document an agreed-upon termination date, but would allow the listing agent to maintain protected buyers, if any.
- Refer the seller to legal counsel and the terms of the listing contract if the broker intends to bring any legal action for damages against the seller.
The termination of listing provision from the WB-11 Residential Listing Contract is as follows:
Termination of listing
Neither Seller nor the Firm has the legal right to unilaterally terminate this Listing absent a material breach of contract by the other party. Seller understands that the parties to the Listing are Seller and the Firm. Agents for the Firm do not have the authority to enter into a mutual agreement to terminate the Listing, amend the commission amount or shorten the term of this Listing, without the written consent of the agent(s)’ supervising broker. Seller and the Firm agree that any termination of this Listing by either party before the date stated on line 312 shall be effective by the Seller only if stated in writing and delivered to the Firm in accordance with lines 280-302 and effective by the Firm only if stated in writing by the supervising broker and delivered to Seller in accordance with lines 280-302.
CAUTION: Early termination of this Listing may be a breach of contract, causing the terminating party to potentially be liable for damages.
Changes to MLS compensation
Once a listing firm enters a listing into the MLS, when is the listing firm able to change the offer of compensation for a cooperating agent?
The WB-1 Residential Listing Contract-Exclusive Right to Sell entered into between the seller and listing firm identifies the amount of compensation a listing firm offers cooperating firms.
COMPENSATION TO OTHERS The Firm offers the following commission to cooperating firms: _______________. (Exceptions if any): ____________.
If a listing contract is amended using the WB-42 Amendment to Listing, the amount of cooperative commission offered by the listing firm to cooperating firms may be modified.
According to the Code of Ethics Standard of Practice 3-2, the listing broker also may, prior to the submission of an offer to purchase, unilaterally modify the MLS offer of compensation. After an offer is submitted, any agreement to modify the MLS offer of compensation would need to be agreed upon by the two brokers/MLS participants.
Standard of Practice 3-2
Any change in compensation offered for cooperative services must be communicated to the other REALTOR® prior to the time that REALTOR® submits an offer to purchase/lease the property. After a REALTOR® has submitted an offer to purchase or lease property, the listing broker may not attempt to unilaterally modify the offered compensation with respect to that cooperative transaction. (Amended 1/14)
Tracy Rucka is Director of Professional Standards and Practices for the WRA.