Code of Ethics Case Study: Article 16 – Respecting Agency Relationships

Following is an interesting case study about a REALTOR’s refusal to disclose the nature and current status of a listing to another REALTOR.  Read on…if you were sitting on the hearing panel would you have found the respondent in violation or not in violation of Article 16?

Case #16-7: REALTOR’s Refusal to Disclose Nature and Current Status of Listing to Another REALTOR

Client Xavier listed his home with REALTOR Anthony under an exclusive right to sell listing agreement negotiated for a period of 90 days.  During the first 75 days, REALTOR Anthony attempted various marketing strategies, but none were successful.  Client Xavier expressed disappointment and told REALTOR Anthony that he might seek another agency when the listing expired.

That same day, Client Xavier expressed to a friend his dissatisfaction with REALTOR Anthony’s lack of results, and mentioned he might employ another agency.  The friend, in turn, related this information to his friend, REALTOR Bob, and suggested that REALTOR Bob contact Client Xavier.  Aware that the property was currently listed with REALTOR Anthony, REALTOR Bob called REALTOR Anthony, explained the information passed on to him, and inquired about the nature and current status of Client Xavier’s listing with REALTOR Anthony.  Specifically, REALTOR Bob asked REALTOR Anthony when the listing would expire and whether the listing was an exclusive right to sell or open listing.  REALTOR Anthony responded that the listing was his and refused to discuss the matter further.

REALTOR Bob then contacted Client Xavier and explained that their mutual friend had informed him that Client Xavier might be seeking another agent to sell his property.  REALTOR Bob told Client Xavier that he did not wish to interfere in any way with Client Xavier’s present representation agreement with REALTOR Anthony, but that if Client Xavier intended to seek another agent when his present listing agreement with REALTOR Anthony terminated, he would like to discuss the possibility of listing Client Xavier’s property.  Client Xavier invited REALTOR Bob to his home that evening, and there they discussed the terms and conditions under which REALTOR Bob would list his property upon termination of REALTOR Anthony’s listing.  REALTOR Bob and Client Xavier did not enter into any written agreement at that time.  However, Client Xavier requested REALTOR Bob to meet with him the day following the expiration of REALTOR Anthony’s listing, and Client Xavier said that at that time he would execute a new listing agreement with REALTOR Bob.  The property did not sell before REALTOR Anthony’s listing expired, and on the day following, Client Xavier listed the property with REALTOR Bob.  Upon learning of REALTOR Bob’s listing, REALTOR Anthony filed a complaint with the Board alleging that REALTOR Bob violation Article 16 of the Code of Ethics.

At an ethics hearing, REALTOR Anthony presented his complaint that REALTOR Bob had contacted REALTOR Anthony’s client during the unexpired term of the client’s listing agreement and had, therefore, violated Article 16.

REALTOR Bob defended his action by pointing out that when he was informed that Client Xavier was seeking another broker, he sought to respect the agency of REALTOR Anthony by calling him to inquire about the type and expiration date of the listing.  He said he told REALTOR Anthony he would respect his agency agreement, but that he needed to know this information to determine when, and under what circumstances, Client Xavier would be free to list the property with another broker.

The hearing panel concluded that REALTOR Bob had adequately respected the agency of REALTOR Anthony as interpreted by Standard of Practice 16-4.  The panel’s decision indicated that a listing broker should recognize that his refusal to disclose the type and expiration date of a listing to an inquiring broker frees the inquiring broker to contact the seller directly.  If the contact with the seller is made under the provisions of Standard of Practice 16-4, the REALTOR is also able to discuss the terms of a future listing on the property or may enter into a listing to become effective upon the expiration of the current listing.  The Panel found REALTOR Bob not in violation of Article 16.

For a copy of the 2019 Code of Ethics and Standards of Practice, please view or download the document here.