MAR Legal Hotline Notes - November 2017
Monday, November 6, 2017
Posted by: Karen DeDonato
Notes from the MAR Legal Hotline
As a listing broker, can I require that a cooperating broker attend all showings?
The Massachusetts Association of REALTORS® Legal Hotline has received a number of questions regarding open houses, procuring cause, and a listing broker’s ability to condition the terms under which a cooperating broker may be entitled to compensation offered on the MLS. Under the NAR model MLS rules, the provisions of which are followed by many- if not most- MLSs, the offer of compensation to other members is “unconditional except that entitlement to compensation is determined by the cooperating broker’s performance as the procuring cause of the sale.” Thus, by attempting to require certain actions or conditions on the part of a co-broke (such as you must accompany the buyer on all showings) the listing broker is then conditioning the offer of compensation and therefore creating a stipulation that, while not illegal, would be inconsistent with the rules most MLSs follow and therefore make the listing unavailable for submission. For example, though it may be true that accompanying one’s buyer to all showings of the property would certainly be helpful in establishing that the co-broke is procuring cause, failure to do so does not automatically mean that they are not procuring cause. Members with questions or concerns regarding the rules of their MLS should review them for clarification.
My buyer’s offer was verbally accepted. Several hours later I was told that the seller has accepted another offer. What rights does my buyer have?
In order for a contract for the sale of land in Massachusetts to be enforceable, it must comply with the statute of frauds (M.G.L. Chapter 259 Section 1). The statute of frauds states that no action shall be brought upon a contract for the sale of real property unless it is in writing and signed by the party against whom enforcement is sought. In other words, a verbally accepted offer is probably not binding until it is signed by the seller. Further, the license law also contains a provision requiring all licensees give both the “buyer and seller a copy of the purchase and sale agreement.” (M.G.L. Chapter 112 Section 87AAA). Brokers are encouraged to establish office policies to ensure compliance with these rules and ensure that their client or customer doesn’t lose out on an opportunity to purchase the home of their choice.
REALTORS® also have an ethical duty regarding documentation in real estate transactions. Article 9 of the Code of Ethics requires that “REALTORS®, for the protection of all parties, shall assure whenever possible that agreements shall be in writing, and shall be in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party upon their signing or initialing.” This article falls under a REALTORS® obligations to clients and customers, however, compliance with the article will help ensure compliance with the law. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at email@example.com.
Source: Massachusetts Association of REALTORS® Legal Staff
Michael McDonagh, MAR General Counsel
Justin Davidson, MAR Legislative & Regulatory Counsel
Catherine Taylor, Staff Attorney