Licensees have a duty to safeguard the public interest, serve clients and customers, and protect the property and/or personal property of the private homes to which licensees are given access. The questions and answers in this month’s article will address the potential risks for buyers, sellers and licensees when providing access to property for showings and open houses. As a licensee, it’s imperative that you consider safety and risk reduction any time access to property is requested. Also, plan ahead for personal safety, the potential buyer’s safety, keeping the property secure, and don’t forget about the pets.
Seller’s property
How do agents and potential buyers properly obtain access to listed property?
When a property is listed, the authority to access the property begins with the terms and conditions of the listing contract. See the excerpt at the bottom of this article. The seller agrees to allow access for showing purposes. The authority is also regulated by the REALTOR® Code of Ethics.
The Code of Ethics provides guidance for listing brokers in Standard of Practice 1-16:
“REALTORS® shall not access or use, or permit or enable others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller.”
The conduct of cooperating brokers is addressed in Standard of Practice 3-9:
“REALTORS® shall not provide access to listed property on terms other than those established by the owner or the listing broker.”
Before granting access to cooperating brokers or buyers, it is important for the listing broker to know who is entering the property. If the cooperating agent requesting a showing is not personally known by the listing broker, be sure to check the cooperating broker’s credentials. The Wisconsin DSPS licensee lookup is available at app.wi.gov/licensesearch. In markets with electronic lockboxes, the process may be simplified as brokers can only gain access with proper lockbox codes. Some brokers and markets continue to use combination lockboxes. If you use such lockboxes, be sure to reset combinations for each property listed. Do not use automatic patterns like the first three letters of the street name or the seller’s name. Likewise, if you have any really old-school boxes with the initial code “SPI,” change them too. Do not provide codes or combinations directly to buyers.
Unescourted buyers
A seller contacted the listing broker stating the seller returned home to find a buyer walking around alone in the home. The buyer said “my agent gave me the lockbox codes and said to check out the house.” What can be done in this situation?
REALTOR® members are required to follow the REALTOR® Code of Ethics. Therefore, a complaint could be filed with the local REALTOR® association. See the previous Code of Ethics excerpts. A complaint might also be filed at the Department of Safety and Professional Services (DSPS). Although license law does not directly regulate access to property, if the seller believes the licensee’s conduct has not safeguarded the public interest, there may be a violation of license law. The seller may also successfully claim a failure to practice competently by providing a buyer access without permission. In addition, there may be a violation of local lockbox rules and regulations. Members of the association or MLS providing lockboxes must follow the applicable association and MLS rules. Therefore, the agent should contact his or her MLS relating the rules.
In the event a lockbox code or combination has been provided to a buyer, the appropriate response is to immediately change the codes. In addition, it would be prudent to re-key the property as an unscrupulous buyer or a thief posing as a buyer could have had copies of the keys made to gain access at a later time.
Vacant property
Does giving access to a buyer matter if the home is empty?
Yes. The fact that a property is vacant does not justify giving a buyer unsupervised access to a property. Access should only be granted with the authority of the seller. There are not excuses to giving out lockbox codes or combinations to buyers, as such practice it is not reflective of safeguarding the public interest.
Additionally, the agent may be found to have violated the terms and conditions of the listing agreement and may be subject to a claim of breach of contract or negligence depending on the facts and circumstances. The listing broker may speak with the cooperating agent’s employing broker to avoid a repeat of any such unauthorized access.
In cases where an agent is not available for a showing, another agent from the company could conduct the showing — but proceed with caution in this scenario as well. In the case of Adloo v. H.T. Brown Real Estate, Inc., the broker was found negligent for giving access to a nonlicensed person. When the seller reported more than $40,000 theft due to unauthorized access, the broker was found liable. Read more about the Adloo case at www.wra.org/casesummary/adloo. Also see the case of ND-Sell, Inc. v. Greater Springfield Board of REALTORS®, Inc., which involves a violation of lockbox rules, at www.wra.org/casesummary/ND-Sell.
Buyer photos and videos
Can the buyer take photos or videos of the property?
Yes, unless the listing is modified, the seller agrees that photographs and videos may occur. If the seller is concerned about such conduct, the listing may be modified. In the case that the listing is modified, the listing broker must, on a showing-by-showing basis, inform cooperating brokers of the seller’s instructions to assure cooperating brokers and buyers do not violate the seller’s directives.
Pet safety
Recently, a cooperating agent showed a property. The listing agent failed to provide instructions about the seller’s cats. The seller, who was out of town, returned to find the cats stuck on the second floor because someone at the showing shut a door at the bottom of a staircase leading up to the second floor. The cats allegedly did some damage in one of the upstairs bedrooms because their access to their litter box was blocked by the closed door. The property owner is now demanding that the agent who showed the property compensate the property owner for the damage her cats caused. What are an agent’s responsibilities during a showing?
The seller should contact the listing agent to discuss any questions related to the seller’s and the agent’s responsibilities during open houses and individual showings. There are risks to permitting potential buyers to tour a property. Issues like animals should be discussed between the seller and the listing broker especially if there are special instructions related to either restricting or not restricting an animal’s access throughout the property. If the listing broker has special instructions, the listing broker should convey those to any other agent who would be showing the property.
Most REALTORS® are aware that the standard listing contract contains a hold harmless provision whereby the seller agrees to hold the broker harmless for any losses or liability resulting from personal injury, property damage or theft occurring during showings or open houses; see the text at the bottom of this article. The listing contract further provides that the seller is responsible for preparing the property for an individual showing or open house in order to minimize the likelihood of personal injury, property damage or theft.
Listing brokers should review this language with all sellers. The seller may consult with his legal counsel or insurance carrier regarding ways to limit or minimize potential liability.
A two-part article about preparing a home for showings is available in the June and July 2012 issues of Wisconsin Real Estate Magazine. See “Preparing Your Seller to Prepare the Home to be Prepared for Showings, Part 1: Pets,” in the June 2012 issue at www.wra.org/WREM/Jun12/PrepareHome and “Preparing Your Seller to Prepare the Home to be Prepared for Showings — Part 2,” in the July 2012 issue at www.wra.org/WREM/Jul12/PrepareHome.
Injury at an open house or showing
What happens if a potential buyer gets hurt at a showing?
There is not necessarily a one-size-fits-all answer. There may be insurance coverage by the homeowner’s policy or either brokers’ policies. As mentioned, the WB listing contract contains a hold harmless provision whereby the seller agrees to hold the broker harmless for any losses or liability resulting from personal injury, property damage or theft during showings or open houses; see the text at the bottom of this article. The listing contract further provides that the seller is responsible for preparing the property for an individual showing or open house in order to minimize the likelihood of personal injury, property damage or theft.
While these contractual provisions do provide a certain level of protection, brokers, including subagents, are not without risk. The listing contract provides that brokers are liable for their own acts of negligence or intentional wrongdoing. This liability risk can take several different forms, and the most obvious are acts of active negligence. In other words, the broker performs an affirmative act that causes injury; for example, a broker accidentally trips a potential buyer who sprains his or her ankle, or the broker bumps the china cabinet and breaks a crystal plate.
In addition to the duty created in the listing contract, all REALTORS® owe a common-law duty of ordinary care to other individuals. This ordinary care standard depends on the facts and circumstances in each particular situation. What is certain is that a broker or salesperson hosting an open house must take reasonable precautions to make sure there are no potential hazards that might result in personal injury to a touring guest. Prior to an open house, the agent has a duty to inspect the premises for hazards and to warn all people entering the home of any potential problems. If an area of a house is unsafe, have the seller correct the problem. If the seller is unable or unwilling, postpone the open house or showing until it is corrected. Remember the seller has a contractual duty to make the home reasonably safe.
Accidents can and do happen. The time to find out about insurance coverage is before the accident occurs. Generally speaking, errors and omissions (E&O) insurance does not provide coverage for bodily injury claims. Brokers are advised to check all their insurance policies or contact their insurance agent to determine what coverage is available.
Open House and Showing Responsibilities
Excerpt from the WB-1 Residential Listing Contract — Exclusive Right to Sell: Lines 253-562
OPEN HOUSE AND SHOWING RESPONSIBILITIES Seller is aware that there is a potential risk of injury, damage and/or theft involving persons attending an “individual showing” or an “open house.” Seller accepts responsibility for preparing the Property to minimize the likelihood of injury, damage and/or loss of personal property. Seller agrees to hold the Firm and its agents harmless for any losses or liability resulting from personal injury, property damage, or theft occurring during “individual showings” or “open houses” other than those caused by the negligence or intentional wrongdoing of the Firm or its agents. Seller acknowledges that individual showings and open houses may be conducted by licensees other than agents of the Firm, that appraisers and inspectors may conduct appraisals and inspections without being accompanied by agents of the Firm or other licensees, and that buyers or licensees may be present at all inspections and testing and may photograph or videotape Property unless otherwise provided for in additional provisions at lines 303-308 or in an addendum per lines 309-310.
Tracy Rucka is Director of Professional Standards and Practices for the WRA.