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Legally speaking: Can I talk to another REALTOR’s seller about taking a listing?

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. The following explores a situation involving having a discussion with a seller about listing a property currently being marketed by another broker… 

Q: I was contacted by a seller about possibly listing her house. When I arrived at the appointment, I noticed there was another broker’s for sale sign in the yard. The seller explained that the current listing with that brokerage is going to expire in a month, and she is considering changing listing companies. I went ahead with my listing presentation and the seller told me she would let me know in a few days. The seller must have told the listing agent she interviewed me because I got an irate call from him saying he was going to report my unethical behavior to the Division and the local Board of REALTORS. Did I do anything wrong? If the seller wants to list with me do I have to wait until the current listing expires?

A: There are two aspects to your question: (1) the REALTOR Code of Ethics, which is handled through the Professional Standards process at the local Board of REALTORS, and (2) the Ohio license law which is enforced by the Ohio Division of Real Estate and Professional Licensing.

Let’s look first at the REALTOR Code of Ethics. Article 16 provides that REALTORS shall not engage in any practice or take any action that is inconsistent with the exclusive representation agreement another REALTOR has with a client. On its face this may seem to suggest that perhaps your discussion with the seller was inappropriate. However, further guidance on Article 16 is found in Standard of Practice 16-6 on this type of situation. It provides that when REALTORS are contacted by the client of another REALTOR about possibly creating an exclusive relationship and that REALTOR has not initiated the discussion, they may discuss the terms on which they might enter into a future agreement with the seller, or alternatively, may enter into an agreement that becomes effective upon the expiration of the existing listing. Therefore, based upon this Standard of Practice, as long as your discussion with the seller involved taking a future listing, it would not appear to violate Article 16 since the seller is the person that initiated the discussion.

As to what you can do if the seller decides to list with you, it is important that you not take any action that interferes with the current listing. However, as Standard of Practice 16-6 states, you may take a listing  that will become effective upon the expiration of the current listing. So for example if the current listing expires on Jan. 31st you could enter into a listing agreement that would become effective on Feb. 1st.To confirm the exact expiration date of the current listing I would recommend asking the seller to see a copy of it.

As far as the Ohio license law, the Ohio Real Estate Commission enforces the Canon of Ethics. Article 17 of the Canons is basically identical to the provisions contained in the REALTOR Code of Ethics. It requires you to respect the agency relationships other licensees have with a client but does allow for discussions with the seller that the seller initiated regarding taking a future listing or one that becomes effective upon the expiration of the existing listing.

Tags: legal, Legally Speaking