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.
This article is the most often violated by agents and the single most cited in Grievance filings and Professional Standard hearings. Below are some concepts and examples of business practices that may or may not violate this article. You get to vote!
The normal industry practice of “working with” buyers does not fall within Article 16 because such relationships are not usually based on exclusive representation agreements.
- Sellers who list are almost always covered because most listing agreements contain exclusive representation clauses.
- To be found in violation, a REALTOR® must have provided, or offered to provide, service covered by another REALTOR’s® exclusive representation or exclusive brokerage agreement.
- Non-targeted solicitations (“farming”) do not violate Article 16. While it is always a good idea and our Company policy to provide a disclaimer it is not required for farming communications.
- Including a disclaimer will not prevent a solicitation from violating Article 16 if the solicitation is in fact targeted at a person exclusively listed with another REALTOR®.
The following are the questions that must be answered to find someone guilty of violating this Article.
What evidence is there of an exclusive representation or exclusive brokerage relationship agreement between the REALTOR® and their client?
- What service did Respondent provide, or offer to provide, the client that was covered by the exclusive representation or exclusive brokerage relationship agreement?
- What evidence is there that Respondent’s offer to provide services was not part of Respondent’s non-targeted general marketing efforts (“farming”)
Client A gave a 180-day exclusive right to sell listing of a property to REALTOR® B. After three months, REALTOR® B’s marketing efforts had produced no offer to buy, but it had called attention to the fact that the property was for sale.
- REALTOR® C heard about the property and called on Client A, saying that if Client A would list the property with him exclusively he felt confident he could provide prompt action. Client A said the property was exclusively listed with REALTOR® B under a contract that still had about 90 days to run. REALTOR® B promised he would call Client A again in 90 days or so.
- The property remained unsold during the term of REALTOR® B’s listing contract. REALTOR® C called on Client A again, and obtained his assurance that he would sign an exclusive listing of the property upon expiration of the listing contract.
When REALTOR® B called on Client A on the last day of the listing contract to seek its renewal, Client A told him of REALTOR® C’s two visits. “I was impressed by REALTOR® C’s assurance of superior service,” Client A told REALTOR® B, “and I have decided to give REALTOR® C a listing tomorrow.
- REALTOR® B filed a complaint against REALTOR® C at the local AOR, alleging an Article 16 violation.
DID REALTOR C VIOLATE ARTICLE 16?
YES OR NO
ANSWER: REALTOR® C did not respect the exclusive agency of REALTOR® B. • REALTOR® C’s first contact with Client A, made when he had no knowledge of REALTOR® B’s exclusive listing, was not in itself unethical.
- But as soon as he learned of REALTOR® B’s status as the client’s exclusive agent, he should have refrained from any effort to get the listing until after the expiration date of the original contract.
- REALTOR® C would have conducted himself in accord with Article 16 if, upon learning of REALTOR® B’s status as exclusive agent, he had expressed his willingness to cooperate with REALTOR® B in the sale of Client A’s property.
REALTOR® X, a residential broker, had recently listed a home. REALTOR® X’s marketing campaign included “open houses” on several consecutive weekends.
- One Sunday afternoon Buyer B came to the open house. REALTOR® X introduced herself to Buyer B and asked whether Buyer B was working with another broker. Buyer B responded that he was, in fact, exclusively represented but went on to add that he was quite familiar with the property as it had been previously owned by a close personal friend. REALTOR® X told Buyer B that she would be happy to show Buyer B through the home and answer any questions he might have, but added that she represented the seller and not Buyer B.
- After viewing the home, Buyer B indicated that he was seriously interested in the property and intended to discuss a possible purchase offer with his buyer representative. REALTOR® X responded that there were several other buyers interested in the property and that it would likely sell quickly. “I can’t tell you what to do, but if it was me, I would make an offer today,” REALTOR® X told Buyer B, “You can go back and discuss this with your broker if you like or I can help you write a purchase contract. It’s your choice.” With REALTOR® X’s words in mind, Buyer B decided to make an offer. REALTOR® X assisted Buyer B in filling out a standard form purchase contract which was accepted by the seller later that day.
REALTOR® X was subsequently charged with violating Article 16 for dealing and negotiating with a party who had an exclusive relationship with another REALTOR®.
- At the hearing, REALTOR® X defended her actions noting that she had told Buyer B that she was the seller’s exclusive agent and, as such, would not and could not represent Buyer B’s interests. • She pointed out that Buyer B had asked for her help in writing a purchase offer and had not sought the counsel and assistance of his exclusive representative.
- She concluded her defense noting that Standard of Practice 16-13 authorizes dealings with the client of another broker when those dealings are initiated by the client.
Question #2: WAS REALTOR X IN VIOLATION OF ARTICLE 16?
YES OR NO?
- REALTOR® X’s inducement of Buyer B by emphasizing that the property might sell quickly (which might well have been true), coupled with her offer to prepare a purchase contract on Buyer B’s behalf, constituted an initiation of dealings on the property by REALTOR® X, not by Buyer B.
- As a result, REALTOR® X was in violation of Article 16.
REALTOR® A worked in a market area that included an attractive suburb of a large city. In this area, there were a number of houses for sale listed exclusively with other REALTORS®, each having the respective listing broker’s sign on its front lawn.
- REALTOR® A developed a special brochure describing the service of his offices and soliciting clients. A commercial distribution service was employed to hang one of these brochures on each home in REALTOR® A’s market area.
- Several of the REALTORS® whose clients received REALTOR® A’s brochures filed complaints with the Board against REALTOR® A, alleging an Article 16 violation. Example 2: Printed Solicitations
- At the hearing, REALTOR® A defended his actions by saying that the distribution of his advertising brochures: – Was widespread in nature – Had been carried out by a commercial distribution service – Was in the same nature as radio or television advertising or a general mailing that might come to the attention of some clients having exclusive listing contracts with other REALTORS®.
QUESTION #3 WAS REALTOR A IN VIOLATION?
YES OR NO
- REALTOR® A did not direct his brochures to property owners whose identity had come to REALTOR® A’s attention through information disclosed by other REALTORS® consistent with their ethical obligation to cooperate with other brokers (e.g., through a “for sale” sign or through information disseminated through an MLS).
- The advertising campaign was directed in an indiscriminate manner to all property owners in a given geographical area.
- A written brochure could be examined or discarded by property owners as they saw fit. It is not a form of communications that harasses a property owner, as would telephone calls or direct personal contacts.
Even if REALTOR A had distributed the flyers himself it would still not have been a violation unless they were only distributed to properties under an exclusive listing agreement.
Field Guide to Professional Standards: http://www.realtor.org/field-guides/field- guide-to-professional-standards
Stay tuned for additional examples in future issues! For future questions regarding Article 16 you can consult any of our Management team or your local AOR.
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