Best of the Hotline: Who gets the seller?

By James L. Goldsmith, Esquire

Facts. A salesperson finds greener pastures with another broker and gives notice of termination to his current broker (Broker A). His assumption that his pending listings go with him are soon bashed as the existing broker makes clear that the listed sellers are contractually bound to the brokerage and not the salesperson; Broker A will not release the listings regardless of whatever protest the sellers mount.

One of the sellers has a close relationship with the salesperson and wants the benefit of salesperson's continued advice. So, when an offer is received by Broker A, seller directs the broker to forward a copy to salesperson for his review. The broker refuses claiming that Broker A has the agency agreement with seller and that salesperson does not. Therefore, reasons Broker A, the salesperson cannot be seller's agent and cannot be involved.

Q. Does the salesperson have a right to continue acting as an agent for the seller? Can the salesperson attend settlement on seller's behalf?

A. Yes, to both. If you are surprised by the answer, perhaps you are confusing several issues. The question was not whether Broker A could enforce his listing agreement against seller (he can, which is not to answer the question of whether that is advisable); nor is the question, does Broker A still enjoy his status as seller agent (he does because in this scenario I gave no indication that the seller terminated the agency relationship - not the subject of this article); nor did I ask whether Broker A is entitled to his fee for having sold the property (he is); and, I have not asked whether Broker A is required to share the commission with the salesperson who procured the listing (it depends!).

The question is whether salesperson may continue to serve as an agent for the seller. Nothing in Pennsylvania law precludes a seller from engaging two brokerages as multiple seller agents. It would hardly make sense to do so because who wants to pay multiple commissions? But in this case, if the seller decides to enter into an agency relationship with Broker B so that Broker B's new salesperson (the one who listed the property while with Broker A) can serve as a seller's agent, it is okay. NAR's Code of Ethics requires, however, that Broker B make an effort to determine whether the seller is currently listed so seller is not exposed to multiple commissions without his knowledge and consent. And it is conceivable that the listing agent in this situation will seek to see the deal through to its conclusion without charging an additional fee to the seller. Also, it may be that the salesperson will receive a portion of the commission from Broker A, having listed the property while with Broker A (again, not addressed here). Regardless of whether he is being paid, if salesperson is to continue in some agency capacity for seller, the relationship needs to be set forth in writing. Presumably, the agent can amend PAR's listing agreement to fit the bill.

And can Broker A preclude his former salesperson from attending settlement? I suppose he can try, but physical restraint is never advised! The salesperson, now having been engaged in an agency capacity by the seller, has a right to attend.

A word of caution: listing agreements are contracts between brokers and sellers. A salesperson who terminates his affiliation with a broker should be very careful and not encourage a listed seller to terminate his or her relationship with the broker. To do so is to flirt with the intentional interference with contractual relations for which one may be sued. Rather, the agent, if asked, should direct the seller to an attorney who can address the seller's rights regarding terminating an undesirable relationship with a broker.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2013

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com