Presenting an Offer After a Listing Expires When a New Listing Agent has Been Engaged

Situation:
Broker A's Exclusive Seller Listing Agreement expires. Broker B lists the property under Exclusive Seller Listing Agreement the day following Broker A's expiration. Three days after Broker A's listing agreement expires, Broker A's agent takes an offer directly to the seller with knowledge of Broker B's Active Exclusive Listing Agreement. Broker A's agent tells seller to have Broker B's agent "hold off," even though Broker B's listing has been published in listing services for three days. Broker A's agent verbally tells seller that Broker A's listing has to be extended in order to present the offer. The seller then signs a counteroffer. The seller has no experience in real estate and is fearful of losing the offer. What are the legal and ethical issues regarding these actions? 

ANSWER: Wow! This licensee needs a lesson in both Georgia license law and ethics. 
License Law
First, once a property is listed with a new broker, the previous listing broker cannot do anything to interfere with the new listing agreement. Going to the seller and telling her to hold off on the existing listing agreement (which is already in effect) and to instead extend the previous listing agreement with the first broker is the same thing as telling the seller to cancel the new listing (even though it is only been a short period of time) and reinstate and extend the term of the original listing agreement. Such behavior violates OCGA 43-40 25(b) (13), (14) and (26). The first code section provides that a licensee can be sanctioned for “Inducing any party to a …brokerage agreement…to break such…brokerage agreement for the purpose of substituting in lieu thereof any other …brokerage agreement with another principal”. The second code section prohibits the first broker from negotiating the terms of the offer directly with the seller when the first broker knows that the property is now listed with a new broker. This code section provides that a licensee can be sanctioned for “Negotiating the sale …of real estate directly with an owner…if the licensee knows that such owner …has a written outstanding listing contract in connection with such property granting an exclusive agency or an exclusive right to sell to another broker…” The third code section prohibits a licensee from “Obtaining a brokerage agreement…while knowing or having reason to believe that another broker has an exclusive brokerage agreement with such owner…” 

Code of Ethics
The Code of Ethics violations appear just as significant with possible violations of Standard of Practice 16-4, 16-9 and 16-13. The original broker should have contacted the new listing broker and worked through the new listing broker in presenting the offer.

Source: Georgia Association of Realtors Legal Helpline Q&A, Seth Weissman, General Counsel, GAR
Link to Source: https://garealtor.com/wp-content/uploads/Legal-FAQs-for-web-9.28.pdf


October 4, 2023

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