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April 4, 2017  -  Stay Connected!
 
    

 
QUESTION:  I recently moved to a different real estate firm. When I tried to change the sign at my listing to show the new firm’s name, my old firm told me it was their listing, not mine. Then they said I still needed to return office keys and transaction files. Am I missing something? I thought clients and files belonged to me.


ANSWER: Broker is mistaken. Every listing agreement is a contract between a seller and the listing firm. The listing broker is not a party to the contract and has no authority to terminate or "move" a listing from her old firm to her new firm. Although listing broker is likely the person who signed the listing agreement to create the contractual relationship, broker signed only as an agent of the listing firm and not as a party to the contract. Most RE firms empower brokers licensed to the firm to enter listing agreements on behalf of the firm. However, any transfer or termination of a listing will require written authorization from both the seller and the designated broker of the listing firm. A broker cannot amend a listing agreement by changing the yard sign.
 
As a result, broker's old firm is correct. Broker is not free to put a listing sign for her new firm in seller's yard. Seller is obligated to an exclusive listing contract relationship with the original listing firm until the listing either expires or the seller and designated broker mutually agree to terminate the listing agreement (unless, of course, the preferred outcome occurs and the property sells during the term of the listing).
 
Similarly, buyer agency relationships established between broker and a buyer, while broker is licensed to a firm, belong to the firm. Broker has no independent ability to establish any agency relationship. In every situation, broker is acting as an agent of the firm and thus, agency relationships established by a broker are actually relationships between a consumer and the broker's firm.
 
The answer to the question regarding files is similar. Every firm is required to maintain a transaction file for all RE brokerage services provided by the firm. Brokers licensed to the firm are required, by Washington law, to surrender ALL documents for the transaction file including all agency agreements (i.e. listing contracts/buyer broker contracts) to broker's managing broker for retention by the firm in the firm's transaction file. The transaction file is the property of the firm. Broker's removal of the firm's transaction file(s) (or failure to submit a listing or transaction file to the company in the first place) could lead to serious allegations of broker misconduct. Broker should immediately return any transaction file she removed from her old firm.
 
Finally, return of office keys, payment of any outstanding bills owing to the old firm and similar issues of office management should be handled by broker and firm in a professional way. If broker and firm have an independent contractor agreement, it may address the handling of these office management issues and broker's failure to adhere to contractual requirements could impact broker's contractual right to outstanding or pending compensation. If broker requires assistance in working through any of these issues with her former firm, broker should consult legal counsel.
 

 

The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org . Please tell us your NRDS number when you e-mail the Hotline with your question.



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APRIL 27TH - HILTON SEATTLE AIRPORT & CONFERENCE CENTER
The 2017 Washington REALTOR Business Symposium is proud to announce nationally recognized speaker Jackie Leavenworth will be spending the day with us and sharing her knowledge, energy, and passion for real estate. Jackie will present two of her most demanded classes: Negotiations: The Games People Play and It's a Price War to the Door. Lunch and parking included! [Get more info and register today.]
 
 
 
 
 

 
 
MAY 24TH - SEATTLE AIPORT MARRIOTT
The 2017 Washington REALTOR Legal Symposium is back and better than ever!  This event has outgrown our original venue so we've relocated to the Marriott Hotel across from the airport.  This event gathers leading real estate attorneys in Washington to share current legal issues affecting the industry & to help our members to stay out of trouble! This year, we have; Annie Fitzsimmons, Justin Haag, Lars Leste, Doug Tingvall, Chris Osborn, Jeannie Simpson, and Mark Schedler. [Get more info and register today.]
 

 
 
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QUESTION from 4/18/2016 - As I audit files, I seem to get a handful of forms that do not have one of the buyer or seller names typed in at the top. Trying to get one of the parties to fill this out properly can be challenging after mutual acceptance. What affect does this have on the contract? Who can fill out the names? Do all parties need to initial this addition?


  
ANSWER - Brokers are held to the standard of care of a lawyer when filling in the blanks on a purchase and sale agreement. Addenda are part of the purchase and sale agreement. This question illustrates unacceptably sloppy practices by brokers who are NOT conforming to the standard of care required of them when practicing law ... which brokers are absolutely doing when they fill in the blanks on purchase agreements.
 
How difficult can it be to write the last name of each of the parties at the top of the addenda, along with the property address and the date of the purchase agreement? Guaranteed, an expert witness at any trial where a broker's practice of law, in completing purchase agreements, is questioned, will testify that a lawyer would properly identify the purchase agreement to which any addendum is attached.
 
The question is, if the purchase agreement to which the addendum is attached is not properly identified, then is the addendum actually part of the purchase agreement. A court would ultimately answer that question, ruling in favor of one of the broker's client and against the client of another broker. Answering that question today is not possible because a court would have to review all of the facts associated with the particular transaction in order to answer that question.
 
The lesson that is the relevant by-product of that question, however, is that brokers should be completing all of the blanks at the top of any addendum that is part of the purchase agreement. By engaging in that very simple practice, brokers avoid litigation, for their clients, as to the impact of broker failing to include the identifying information. After all, if a party is involved in litigation, a broker is in trouble if the litigation was necessitated by actions that the broker took or failed to take. Failing to completely fill in the identifying blanks at the top of an addendum is a simple and required action that prevents the risk of litigation on this issue.
 
With that said, answering the question actually asked is not easy. To some degree, identifying the contract to which the addendum is attached is secretarial in nature. Identifying the contract is not a "term" of the agreement so perhaps it should be simple for reviewing broker to simply add the party names to addenda when the defect is noticed during contract review. But, it is possible for a party to argue that they never intended this particular addendum to be attached to this particular contract. In some cases, that argument would be strained at best. There are fact patterns, however, where that argument could be viable. At the same time, it makes no sense to have parties initial and date the inclusion of the identifying information because it would not constitute a counter offer and would not contribute to the calculation determining the date of mutual acceptance.
 
DB's first effort should be to solve this problem through education. All brokers should be including all identifying information on every addendum. If DB is confronted with this issue nevertheless, then the identifying information should be added and both parties should be provided a new copy of the purchase agreement, including the addendum with the newly added identifying information at the top, and notification that the missing information was included for clarification only.
 
(You will need your NRDS# & password to access the Legal Hotline)
 
The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org. Please tell us your NRDS number when e-mail the Hotline with your question.