We have fielded many calls about liability issues for showings during this time. I think MAR Counsel Catherine Taylor summed it up best in our Wednesday Member Webinar when she said this is an unprecedented time, and taking safety precautions as best as possible is important as is finding solutions to showing and access issues this has created. We just received a lengthy legal summary of legal issues for consideration and could be so helpful to Brokers who have been struggling with these decisions. This was written by Camille Beshara, of Larson Skinner. Mitch Skinner and Camille are the counsel the we use for our copyright, MLS policy and vendor contract approval for the Board and especially the MLS. We thank them for allowing us to share:
These days business as usual looks a little different. Stay-at-home orders, social distancing, and other efforts to slow the spread of COVID-19 make some in-person activities more difficult. Showings and open houses are a bit of a challenge for sellers, buyers, and their real estate agents. We’re hearing questions about whether buyers can have their agents go to showings or open houses without them, photograph or video-record the homes, and share the results with the potential buyers. Some have proposed having agents live-stream while walking through a property and talking with remotely connected buyers. All these options exist, so long as you address certain concerns.
This post provides some considerations and tips for MLSs, brokers, and consumers, but it’s not meant as legal advice. If you need legal advice, consult your counsel. This post assumes that virtual showings and open houses are conducted in a manner compliant with all applicable federal, state, and local orders and restrictions. A subsequent post will discuss buyer broker and buyer concerns.
Seller Legal Concerns
Risks associated with showings
Typically, sellers anticipate that having their property for sale means having it available for showings, open houses, broker tours, and the like. Buyers and their brokers can come in-person to look at most listings just by making an appointment—no special arrangements are necessary. Those appointments may be scheduled via the MLS’s showing scheduling software and access to a property obtained via a lockbox. For some kinds of listings, in certain markets, listing brokers may screen buyers more carefully before permitting showings and listing brokers may even accompany buyers and their agents.
There is always some level of risk with making your property available for showings. Key risks for sellers and their brokers can depend on whether the listed property is occupied. For example, if the property is unoccupied, knowledge of that fact by the general public could result in someone attempting to squat on the property, potentially damaging it and any furnishings left or staged within.
If the property is occupied, additional concerns can arise. What if the buyer is really a criminal trying to “case the joint,” and hoping to come back later and burgle it? Or, what if the buyer carries pathogens that pose a risk to the health of the residents (a concern now especially relevant in the COVID-19 era)? During showings, it is likely that the buyer or the broker will make physical contact with surfaces in the house. Does that contact now create circumstances that could endanger the residents by, for example, sneezing in the kitchen?
Assuming that normally the seller’s listing would be marketed so that buyers’ brokers can just make appointments and show it in person, the risks of allowing the buyers’ brokers to do a ‘virtual showing’ instead (by taking photos, making video recordings, or live-streaming) are more or less the same as those for traditional physical showings, except in one respect: The resulting media from the virtual showing might be distributed beyond the buyer and the agents. In other respects, the buyer potentially has less freedom to engage in misconduct in the property, and fewer people are present to bring pathogens into an occupied home.
Addressing virtual showing risk
There are two ways of addressing issues related to distributing the media. One is not to worry too much. After all, many listings are already visible on the internet with a great many photos, sometimes depicting the same bathroom from six different angles (though why that would be necessary, I cannot say). Anyone trying to surveil the property to determine if it’s occupied could already probably figure it out (assuming the photos displayed on the internet are current).
The second way to deal with media distribution concerns is in a lawyerly way: Constrain the parties with agreements. The seller could insist that—as a condition of virtually ‘showing’ the property—the buyers’ agent must agree that any resulting media can only be distributed to the buyers, and buyers must also agree not to distribute it beyond that. Sellers could also prohibit buyers’ agents from creating any media at all, as long as they understand the marketing consequences.
Suggestions for listing brokers and MLSs
Listing brokers could assist their sellers by having a standard form for instructions about media that buyers’ agents create during showings or open houses. MLSs could help listing brokers by creating the form and having applicable fields in the MLS system. MLSs might also consider adding common restrictions to the Showing Requirements field in the MLS system. MLSs could also provide guidance to listing brokers about how to add restrictions to the Showing Instructions field. Larger brokers and MLSs might also assist by creating a form or forms that buyers’ agents can use to secure the buyers’ agreement not to distribute media further. Finally, MLS might have a rule or rules that make it clear that buyers’ brokers must comply with any restrictions that the sellers’ brokers has identified in MLS. The consequences of non-compliance could be significant, owing to the security and health concerns involved.
The Berkshire MLS has determined that no new forms for showing instructions will be added at this time. Instead, we have created policies that only apply during the COVID stay at home order by the Governor for the use of virtual showings as an option to satisfy MLS requirements. The MLS has also waived the requirement that homes that are not available for showing have to withdrawn from the system – they can remain in the MLS as active (or withdrawn, which stops the DOM) depending on the seller’s preference. Showing information must be stated in the Realtor-to-Realtor remarks. It has also been deemed acceptable for the listing broker to upload any showing requirements for PPE (personal protection equipment that must be worn, such as facemasks or booties), sanitation requirements, no hands requirements or forms that must be completed prior to in-person showing to the listing.
In the COVID-19 era, sellers might want to require visiting agents (and their buyers, in the case of permissible in-person showings) to comply with all CDC safety protection measures, for example, by wearing a mask while visiting the property. Sellers might also like to take certain steps after any showing to address concerns about pathogens. This could be as simple as wiping down key surfaces with disinfectant wipes after each showing. It could also mean restricting showing times to certain intervals, after which the sellers might engage in more thorough cleaning. Listing brokers might want to offer sellers assistance or guidelines in these respects, and MLSs could conceivably offer help to the brokers.
Buyer Legal Concerns
Buyer’s brokers’ risks to consider
From the buyer’s broker perspective there are several aspects of virtual showings to consider, including health, technology, and legal concerns. This post is not legal advice and assumes that virtual showings and open houses are conducted in a manner compliant with all applicable federal, state, and local orders and restrictions.
For buyers’ brokers, the health concerns are similar to sellers. Brokers and agents may wish to take measures to protect themselves while virtually showing a property (see the CDC’s recommendations here) against transmitting or acquiring pathogens. Any buyer touring a property would likewise have similar concerns. Most of the other concerns on the buyer side are legal in nature.
Permission and privacy
As a preliminary matter, buyers’ brokers and agents must determine whether they can make media for virtual showings at all and whether they can freely distribute the media. Individuals have a reasonable expectation of privacy in their own homes. Buyers’ agents physically present on someone else’s property must have permission to be there (or trespass, which is not recommended).
Typically, permission to enter the property is provided via scheduling a showing appointment (often through the MLS) with the listing broker. If permission is conditioned on the buyers’ broker NOT making media, then the buyers’ agents cannot make media. If it is conditioned on buyers’ broker not allowing distribution of media beyond the buyers themselves, then the buyers’ broker must not allow that distribution. The consequences of violating these strictures depend a great deal on how the buyers’ brokers learn of them—whether in a notice on MLS, a special contract for accessing the property, or some other means.
Next, buyers’ brokers must consider whether they have the necessary means to distribute media to their buyers or beyond, meaning what media channels and technology platforms to use. Additionally, they may want to know whether others can make use of their media, too. Brokers should be familiar with the end-user license agreements of any platforms they plan to use to create and share media resulting from a virtual showing. If the platform can use the media in a way not permitted by the seller (e.g., public distribution or creation of derivative works), the buyer’s broker could be in hot water.
Buyers’ brokers must understand the technology well enough not to distribute media accidentally. For example, doing a virtual showing using Facebook’s live streaming technology might work well for buyers and their brokers, but in that case, the broker should be sure they have selected the audiences to whom the stream is visible. They could otherwise end up violating the seller’s requirements or publicly embarrassing their buyers. Live-streaming poses additional risks because of its live nature, meaning that it can’t be edited before distribution. Buyers’ brokers should understand who will be in the home during a virtual showing, and everyone should plan to be on their best behavior.
Buyer’s broker should also understand the output of the platform. Will the use of a particular platform allow the broker to brand the media in a way consistent with their firm’s other materials? Note that if the media will be submitted or distributed through the MLS then the MLS may have certain rules regarding media standards and branding.
Copyright and intellectual property considerations
Buyers’ brokers also have legal rights in the media they create. Photo and video recordings have long been deemed “works of authorship fixed in a tangible [digital] medium of expression” and thus are subject to copyright. Live-streaming, a relatively new technology, is subject to copyright too. The creation of a live-stream results in the immediate creation of multiple copies of the recording. These copies are necessary for the distribution of the live-stream to multiple platforms across the broader internet. So, any persistent copies of live-streamed video are subject to the author’s copyright (this will probably be the agent unless the broker acquires copyright ownership in their independent contractor agreements with their agents, see here for more details on “Who owns the listing content”).
If the media is subject to copyright, then others may not use that media without the copyright-owner’s permission. Stated another way, if brokers want others to be able to use their media, then they need to grant a license for that use. For buyers’ brokers, there is likely an implied license upon distribution to their buyer client. Also, if the video or live-stream is submitted or distributed via the MLS, then the typical MLS licenses are granted (i.e., those described in MLS’s rules and participant/subscriber agreements). Of course, there are many potential exceptions and situations where others can use the media content depending on the circumstance, and this post cannot cover all the ground of copyright law. The key point is that copyright considerations will be in play for media created for or from virtual showings.
Defects in the property
One last matter that may be of interest to sellers, buyers, and brokers from both sides: Does the use of virtual showings change the legal standards for the discovery of defects? In many states, a buyer may recover against a seller if, after closing, the buyer asserts that (s)he has suffered some harm due to a defect in the property that the seller did not disclose. In some states, there is no such liability for ‘obvious defects,’ ones that any reasonable buyer should have seen upon reasonable inspection before purchase. Visiting a property via live-streamed video or virtual tour, however, could make it more difficult for the buyer to detect and assess defects than being there in person. It is possible that the legal standard for obvious defects may evolve in the coming years to reflect these changing market conditions.
Meanwhile, buyers might have to repose more trust in their brokers, who might need to be more concerned about liability as a result. Buyers might be upset by a larger range of defects, because they might not see them until moving in, raising potential concerns among sellers and buyers’ brokers about liability flowing their way. All parties to the transaction might wish to ensure the buyer pays for a third-party inspection before making an offer. While a virtual showing might be a viable preliminary option, there’s a good likelihood that buyers will still want to see the property in person prior to purchase.
Of course, there may be other aspects of virtual showings that are of concern to buyers or their brokers that we didn’t address above. If you’re looking for more guidance and resources on virtual showings, check out NAR’s resources here, here, and here, and CMLS’s resources here.
As we continue to navigate the COVID-19 world, virtual showings and open houses will likely increase as they facilitate the marketing of listings. Hopefully, you’ve picked up a few useful tips to addressing a seller’s concerns regarding virtual showings.
– Camille Beshara, Attorney at Law, Larson Skinner, PLLC
Camille, a member of Larson Skinner, PLLC, practices intellectual property and corporate transactional law. Camille advises clients on corporate governance, association mergers, content and software licenses, copyright risk mitigation, general business and MLS policy strategy. In addition to advising various MLS, association, and brokerage clients, she provides support counsel to the Real Estate Standards Organization and the Council of Multiple Listing Services. Camille has written and lectured on legal topics relating primarily to the multiple listing service industry. Prior to joining Larson Skinner, Camille was an attorney at 3M Corporation where she supported contract negotiation efforts for new technology developed under cooperative research and development agreements. Beshara earned her J.D. from the University of Minnesota School of Law and her B.S. in Business from the Carlson School of Management at the University of Minnesota.