BARRISTER'S BRIEFING: Realtors as Marketplace Participants
Leon Cameron, Esq. | September 2017
Realtors just like all real estate licensees are participants themselves in the real estate marketplace, either as landlords, sellers, buyers or tenants. When acting in these capacities, Realtors should be aware that the Code of Ethics still applies.
If a Realtor is interested in either selling or renting their property, they are obviously free to do so. They are not obligated however, under either license law or the Code of Ethics, to sell or rent their property through their affiliated brokerage. If an office policy exists whereby a licensee is contractually obligated to sell or rent their property through their broker, counsel should scrutinize such agreement. The reason for such analysis is to see if the agreement constitutes an unlawful restraint on alienation of real property.
Even if a licensee is not selling or renting vis-à-vis their affiliated brokerage, Realtors still have an Article 4 duty to disclose their status as Realtors and to make their true position known on the transaction e.g. whether they are acting in an agency or non-agency capacity and if they are seeking a commission. This is likewise true if the Realtor is seeking to rent or buy a property. Other Articles under the Code of Ethics still apply. These include, but are not limited to, the Article 1 duty to treat all parties to a transaction honestly.
A situation may arise whereby a buyer, who is a Realtor, seeks to rent or purchase property solely for individual purposes. In this role, they are not transacting real estate in an agency capacity, or to seek a commission. The Article 4 duty requires the disclosure of oneself as a Realtor. Likewise, other Code of Ethics Articles apply, including but not limited to, Article 1. However, if the prospective buyer or tenant is not looking to solicit a listing on behalf of their broker or seeking a broker’s commission, then that Realtor is not acting in an agency capacity. As such, Article 16 of the Realtor Code of Ethics is not implicated. That article states as follows.
“Realtors shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtors have with clients.”
When we parse through the above language carefully, we find a careful distinction that must be drawn between professional courtesy and an ethical mandate. If a Realtor is merely seeking to rent or buy a property for themselves and are not soliciting a listing and are not seeking a cooperating commission, then they are not interfering with exclusive representation. Although one could argue that a professional courtesy is still owed to the listing agent to present an offer through the listing agent, such a duty is likely not owed from an ethical perspective. It would nonetheless behoove any Realtor acting in a non-agency capacity to present their offer to purchase or rent through the listing agent, as a collegial nicety if nothing else.
Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.