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Warning: Don’t get between sellers and another listing company

By Joel Maxson

June 5, 2017 – Part 1 of this 3-part series explained that Florida Realtors residential listing agreement requires the seller to get the broker's consent to terminate; otherwise, the seller could be exposed to a claim for damages for possible breach of contract.

Part 2 summarized conditional and unconditional termination, and demonstrated that a seller who wants to continue marketing the property with a new real estate company needs an unconditional termination rather than the conditional termination described in the listing agreement.

Part 3 concludes the series with a warning: Realtors should avoid responding to a seller's request for advice on a listing agreement they signed with another company.

If a seller approaches a Realtor to discuss listing a property before an existing listing with a different company expires, the Realtor Code of Ethics Standard of Practice 16-6 provides specific guidance that limits how a Realtor should respond. It first says that Realtors should never directly or indirectly initiate this conversation. And if a seller initiates the conversation, the Standard of Practice provides that a Realtor may discuss terms for a listing agreement that will become effective after the existing agreement with another company expires.

This narrow discussion is the only safe option available to a Realtor, even though the seller's first question will often be: "How can I get out of my current listing agreement?"

If a Realtor ignores this warning and reviews another company's listing in order to advise the seller about his rights and obligations, it could be the unauthorized practice of law, which is illegal, in addition to an ethical violation.

If this isn't enough reason to stay away, the Realtor could be sued by either the seller or the listing broker if one of those parties suffers financial harm based on specific advice the Realtor gave.

One quick disclaimer: This short article is only addressing the very specific question of what legal and ethical pitfalls could occur if a Realtor reviews another company's listing agreement and gives a seller specific advice on the seller's rights and obligations under that agreement.

So, what can a seller do here?

The seller can always talk with their existing broker first to see if they can negotiate a friendly (or friendly enough to get the job done) unconditional termination. If that fails, the seller should carefully read the listing agreement and seek advice of counsel, should there be any questions regarding seller's potential liability for terminating the listing.

Joel Maxson is Director of Member Legal Services

© 2017 Florida Realtors®


Related Topics: Florida Realtors Legal News