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Disagreeing Realtors May Both be Right – Or Wrong

There’s often more than one way to interpret a rule. When warring sides can’t agree, it’s up to a judge, jury or panel to decide.

ORLANDO, Fla. – A broker represented a seller in a transaction-broker capacity. He was on vacation when two offers landed in his inbox. One came from an associate inside his company, while the second came from another broker who had a reputation for aggressive behavior. The offers were comparable, with the listing broker’s offer having a slightly lower purchase price but no financing contingency.

The seller was also away from home on a business trip, so she and her broker chatted over the phone about the two offers. At the conclusion of that call, they agreed that the listing broker would have the associate from his company forward that offer to the seller’s email address and field any questions or counteroffer terms the seller might have. Since the seller said she wasn’t interested in the terms of the competing broker’s offer, it wasn’t forwarded.

The seller accepted the offer from the listing broker’s associate, and the transaction went to closing. The rival broker noticed the sale and, upon confirming details, saw that the purchase price the seller accepted was slightly lower than the one he had submitted. He exercised his right under NAR Code of Ethics Standard of Practice 1-7 and demanded that the listing broker confirm that his buyer’s offer was presented to the seller. The listing broker explained the situation and assured the broker that seller had ample information about both offers before choosing the one his associate presented.

The cooperating broker was irate that his buyer’s offer wasn’t forwarded to the seller, so he filed an ethics complaint, alleging a violation of Article 1, citing Standard of Practice 1-7 “When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.” He argued that discussing key contract terms over the phone wasn’t submitting the entire written offer, which is what the rule requires.

The listing broker had the seller testify that she was satisfied with her listing broker’s description  of both offers and was perfectly happy with the decision to just receive a copy of the offer she ultimately accepted. The broker further argued that he did objectively describe both offers faithfully over the phone and that since the rule doesn’t explicitly include the phrase “in writing,” a verbal submission could be acceptable. He finally argued that the spirit of the rule is to ensure his seller can make a fully informed decision, and that since both offers were written on the same form, the only real differences were the terms he objectively explained over the phone. In his closing statement, he said he regretted not asking the seller to send an email confirming she didn’t want to see the other offer, but that if they did find him in violation of Article 1, he asked that they issue a low-level discipline, like a letter of warning.

This is probably the part of the article where you want to know what happened next. However, this is a hypothetical, so there’s no outcome to report. While NAR Case Interpretations do include an outcome and rationale, this hypothetical would ultimately be up to the panel to decide. While I have my own thoughts, a panel may see things differently. They may even disagree among themselves and would ultimately go with a majority vote.

The origin of this idea was a case I reviewed recently, where there was a phone conversation about competing offers, with an attorney for the licensee arguing this meets the legal requirement of presenting an offer. It made me wonder how one of our local board hearing panels would analyze a similar fact pattern using the Code of Ethics.

Here are a few practical takeaways, from the perspective of a member calling the Florida Realtors Legal Hotline.

  • Each hearing panel conducts its own analysis of the rules and interprets the Code of Ethics. There are standards of practice and case interpretations to help guide their decision-making process, but the analysis is ultimately up to each panel.
  • Every case is different, and the tone and demeanor of the people making arguments can influence the outcome. So can additional facts that arise during the hearing.
  • Rules can start to look a little different if you spend a lot of time ruminating on each word. For example, there’s one specific sentence our department has been kicking around for two years. I’ve probably logged at least 20 hours looking at it and writing about it. And we still don’t agree about the “correct” interpretation, likely because, in my opinion, it’s open to at least two.
  • While we love to share information about how laws and procedural rules fit together, it’s very challenging to predict an outcome based on a phone conversation where we hear from just one side. I’d take anyone who says “the Legal Hotline told me I’m right” with a grain of salt. I’d be willing to bet there was more nuance to that conversation, and unless it’s a simple issue, “you got it right” is a very rare response for us.
  • It is possible to seek a professional analysis of what a reasonable range of outcomes might be, but that task is best left to a party’s own lawyer who has reviewed all of the documents, confirmed the facts, researched the law and, importantly, analyzed the key people who play a role in the outcome (judge, jury, witnesses, attorneys representing both sides, etc.).

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

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