Thank you to the legal team at the Mass Association for sharing with us their notes of calls they’ve received through the legal hotline.
March 2, 2021
Q: I’ve seen listings that place limitations on the types of offers that will be presented to the seller. Is this legal?
A: Yes, listings may include parameters for submitted offers, however, such parameters must be placed by the seller, not the agent or brokerage policy. The Massachusetts Regulations contained within 254 CMR 3.00 require that a licensee submit all offers to purchase or rent real property to the owner of the property upon receipt of such offers. This obligation is not absolute, however, and may be curtailed through a lawful seller instruction. A seller may provide instruction to their agent to only show them offers that meet certain criteria, such as a certain price or not containing certain contingencies or other clauses. So long as the instruction provided by the seller is not discriminatory or otherwise unlawful, the agent is bound to obey that instruction. As a best practice, the Massachusetts Association of REALTORS® recommends memorializing any seller instructions that modify an agent’s legal obligations in writing.
Q: What happens to pending transactions and clients when an agent switches brokers?
A: When an agent decides to move to another brokerage, it is critical to review the Independent Contractor Agreement signed with the current broker to determine what happens to any pending transactions or existing clients. If using the MAR Agreement of Association as an Independent Contractor (Form #300), paragraphs 10 and 11 dictate how the agent will be compensated for outstanding transactions and what information must remain with the broker. Additionally, the MAR Agreement explicitly states that the agent is not permitted to take prospects, leads, or listings with them upon the termination of the Agreement.
A salesperson should never attempt to induce clients to attempt to terminate exclusive representation agreements with the former brokerage. These agreements are contracts between the broker and the client and, unless otherwise agreed, remain with the broker. In addition to potentially being a breach of the Independent Contractor Agreement, this would likely also amount to a violation of Article 16 of the REALTOR® Code of Ethics.
Whenever an agent leaves a brokerage, it behooves both the agent and broker to document in writing what clients and transactions are outstanding and the current status of each of those transactions. This will provide clarity and help to prevent disputes over what compensation is due when those transactions close.
Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel.
Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at firstname.lastname@example.org.