Have you ever played the telephone game? It’s a simple group game that starts when the leader thinks of a phrase. The leader then whispers that phrase to one person, who in turn whispers it to another. This process is repeated until the final person playing the game hears the phrase whispered to them. At that point, the final person repeats the phrase aloud. Most of the time, the final phrase doesn’t match the first phrase the leader initiated, which often leads to a robust round of finger pointing and puzzling over how the phrase morphed along the way, like when “What’s the biggest hurdle you’ve overcome?” becomes “What’s the biggest turtle you’ve ever seen?”
An extremely common occurrence for us on Florida Realtors Legal Hotline is when a member tells us what a contract, statute or other rule says. But most of the time, rather than reading directly from a source, we hear the member paraphrase what the rule says. We may even hear a member quote another member, which is now at least two steps removed from the source. As you may guess, the paraphrased “rule” is missing crucial words and context, so the conclusions are off, often in significant ways.
Here’s one example: A buyer’s Realtor walks into a closing and notices a familial resemblance between the listing Realtor and seller. She finds out that the seller is the listing Realtor’s cousin and feels compelled to inform the listing Realtor that this could be a problem, since “Article 4 of the Realtor Code of Ethics obligates listing Realtors to disclose when the seller is a family member.”
That paraphrase is close but off the mark.
The mistake is that this rule has two parts – one from the buyer’s side of a transaction and one from the seller’s side. From the seller’s side, the rule provides “In selling property they own, or in which they have any interest, Realtors® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative.”
Notice what’s missing? It doesn’t mention family members at all. Family members are only discussed when the Realtor is representing a buyer who is an immediate family member. So, unless the listing Realtor has an ownership interest, the family relationship (cousins) would have been an optional disclosure based on the language of Article 4. Please note, however: Some people believe failing to disclose that a client or customer is any sort of family member would be inherently deceptive, and therefore it’s a violation of a separate, more general rule that prohibits any type of deceit, so it’s generally better to be transparent just to be safe.
Here’s a second example: A buyer and seller are represented by licensees from different real estate companies. The listing side remains completely silent for a week, despite the buyer’s Realtor leaving multiple emails and voicemails. The last email reads “You’re obligated under license law and the Code of Ethics to present my buyer’s offer, and I demand that you show me something from the seller to prove you submitted it.”
What’s off here? First, Standard of Practice 1-7 provides “When acting as listing brokers, Realtors shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.” So, if there is any scrap of written instruction from the seller that says not to submit certain types of offers, then it would be perfectly fine for the listing Realtor to obey those instructions from their seller by not submitting the offer.
Second, if the buyer’s Realtor requests proof, they are only entitled to a brief response from the listing Realtor, not something from the seller, since the same Standard of Practice 1-7 provides “Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented.”
The lesson here? As often as you can, read directly from the rule, paying careful attention to all the words. You also may want to include the actual rule reference number in conversations you have with colleagues about rules so that you’re both looking at the same words. You may still disagree as to a specific interpretation, but at least you won’t waste time disagreeing over words or phrases that don’t exist.
Joel Maxson is Associate General Counsel
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