BARRISTER'S BRIEFING: A Close Look at Temporarily Off Market, Off Market, Canceled Categories and Interference with Contracts

Brian Levine | January 2020

Brian Levine, Esq.

I got a call yesterday. It’s the type of call I get regularly. The call usually goes something like this: “If a listing is “off market” on the MLS, this means that I can reach out to the homeowner and attempt to list the property, right? My answer: “Well… not really. It depends.” There was confusion on the other end and I had to explain the possible scenarios and the impact of what the agent does/does not do next. Seeing that I get this type of call often, I thought I would take the time to discuss it here and, hopefully, assist everyone in gaining a better understanding of what it means when you see a listing either “temporarily off market,” “off market” or “canceled” in the future.

 

The Categories

Our current MLS has many listing categories. There’s “active,” “contract,” “temporarily off market,” “off market” and “expired.” With the eventual launch of One Key MLS, the term “contract” will change to “pending” and a new term, “canceled” will be introduced. So, what do they all mean?

Active

“Active” simply means that the listing is readily available to be shown. An “active” listing must be made reasonably available to any licensee who wishes to see it (Realtors have a duty of cooperation with other Realtors). Failure to do so can run a Realtor afoul of the Code of Ethics, as well as possible Department of State licensing law. A Realtor interested in the property must communicate with the listing Realtor regarding all matters concerning the property and they cannot communicate with the homeowner directly.

Contract

“Contract” simply means that the listing is currently under contract to be sold. Both the homeowner and the buyer have mutually agreed to enter into a bilateral, executory, contract for the sale of the property. It does not mean that the house is sold… yet. Any Realtor still desiring to see the property must still be able to see it (similar to Active) and, pursuant to our Code of Ethics, any offer made on the property must be conveyed to the homeowner through the listing Realtor, unless a written waiver is signed by the homeowner (and this should be presented to the Realtor making the offer). All offers must be presented, or a waiver provided, up until the transaction closes. With the new One Key MLS, the term “contract” will no longer exist and the new term “pending” will appear instead.

Temporarily Off Market and Off Market

“Temporarily off market” (TOM) and “off market” (OM) are similar, but they have slightly different meanings. TOM means the property is currently off the market and not available to be shown. No one can see it until the listing once again becomes “active.” The understanding with a TOM listing is that it will eventually come back onto the market in “active” status. If an agent is curious about a TOM listing, he or she must contact the listing Realtor agent, NOT THE HOMEOWNER. This is because the underlying listing agreement may still be in effect.

OM is similar to TOM, but the understanding is the listing will never come back onto the market. This could be for various reasons, but the understanding is the listing will never become “active” again during the course of the underlying listing agreement. Again, like TOM, under OM, the property cannot be shown. And again, if an agent is curious about the property, he or she must contact the listing Realtor agent, NOT THE HOMEOWNER. Again, this is because the underlying listing agreement may still be in effect.

What About the New ‘Canceled’ Category

The new category of “canceled” that will be added to the One Key MLS will mean that the homeowner has decided to no longer work with their current Realtor broker and they are demanding that the Realtor broker make the listing inactive. Canceled will be that designation instead of TOM or OM. However, it is important to note that simply because the homeowner no longer wishes to work with the listing Realtor broker, it does not mean that the underlying listing agreement, which is a bilateral contract, has been terminated. Therefore, the inquiring Realtor MUST NOT CONTACT THE HOMEOWNER, but instead should direct all his/her inquiries concerning the status of the underlying agreement to the listing Realtor.

Expired

This category refers to properties previously listed on the MLS whose underlying listing agreements have reached the date of their termination as identified on the listing agreement; the contract has expired. These listings were not sold and they are currently in limbo. It is unclear if the homeowner wants to relist the property or not, and if they are looking to relist, it may not be with their prior Realtor broker. A Realtor is FREE TO REACH OUT TO THE HOMEOWNER (barring any Do Not Call/Do Not Knock prohibition) to see if they are interested in relisting their property with them.

Big Trouble, Confusion Over TOM, OM, ‘Canceled,’ Underlying Listing Agreement

Realtors run into trouble, either with the DOS, HGAR or both, when they make a very simple assumption. That assumption is that if a listing is TOM, OM, or “canceled” it’s the same as being “expired.” That is not true! Simply because a listing in not available to show does not mean that the underlying agreement between the homeowner and the agent has been terminated. It may very well be in full force and effect. A Realtor agent simply does not know.

Because there may still be an underlying listing agreement, a prospective Realtor agent MUST contact the listing Realtor agent to make any inquiry regarding the listing (whether it’s available to list or if they have an interested buyer for the property). Failure to do so can run the Realtor up against possible interference with contracts and/or violation of Article 16 of the Code of Ethics, as there may be a perfectly valid contract between the homeowner and the listing Realtor broker. Remember, only when a listing is “expired” (or the property is not listed, or the homeowner reaches out to the agent directly) can a Realtor discuss with the homeowner any specifics regarding the listing.

What to Do

First, if you ever see a TOM, OM, or “canceled” you should assume that there is an underlying listing agreement and reach out to the listing agent to inquire into the status of the underlying agreement. If you learn that the underlying agreement is being enforced, then you cannot relist the property and any buyer interest in the property must be directed to and through the listing Realtor agent. If you learn that there has been a full release from the underlying agreement between the homeowner and the listing Realtor broker, you may then reach out to the homeowner to discuss the property.

Second, if you learn that the underlying listing agreement has been terminated, you MUST obtain a copy of the written release/termination (signed by both parties) BEFORE you engage the homeowner concerning the property. A verbal agreement will not satisfy the Statute of Frauds (remember that rule?) and you will have no proof that the previous underlying contract was terminated; meaning that the prior Realtor broker could come back and assert a claim on the commission and/or bring an action for interference of contracts/Article 16 violation. Further, there may be a “carve out” or “accord and satisfaction,” which would mean that although the underlying contract was terminated, there is a new agreement in its stead. This new agreement, although releasing the homeowner from the prior contract, may place a restriction on the collection of commission from certain buyers who previously saw the property, previously made offers, or many other possible restrictions. As the new listing Realtor broker, you’ll need to know those details.

Conclusion

It is important to remember that a homeowner has the absolute right to choose his/her representation and a listing Realtor broker cannot prevent the homeowner from canceling such representation. However, simply because a homeowner no longer wishes to be represented by a particular Realtor broker, that does not mean that the Realtor broker has released the homeowner from the underlying contractual obligation. That underlying contract may remain in force for weeks, months or longer. If a Realtor assumes that the underlying contract has expired, simply because they saw the listing as TOM, OM or “canceled” and relists the property, they may also place their new client homeowner in a very bad situation, which could include breach of contract litigation and the possible result of being required to pay two commissions. Further, relisting the property that already has an underlying contract could expose the listing Realtor broker and agent to possible violation of Article 16, but also the added violation of Article 1 (not acting in the client’s best interest).

In the end, it’s best to be fully transparent, and just make all your inquiries relating to a TOM, OM or “canceled” property with the prior listing Realtor broker. You have nothing to lose.

Brian Levine
Brian S. Levine, Esq. is In-House Counsel/Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.