by Paul Cowhig, Advisor, Professional Standards
There seems to be some confusion about the status of a Cancel Protected listing, so let’s get clear on it.
We all know not to solicit Active listings, but remember, a Cancelled listing is no longer active, it’s cancelled. While there may or may not be an ongoing obligation on the seller to pay their former brokerage a commission, it would not be a breach of the rules for another member to contact that seller to offer trading services.
But, there are still other considerations to be aware of.
That seller must be very clear about their obligation, if any, to pay commission to the previous brokerage. The standard clause “Cancellation Form” allows for a 60-day period so that in the event of a sale, the commission must be paid. But, that clause can be amended to whatever time period the parties agree to.
If it’s an unconditional release, there will likely be no obligation remaining. But, if the cancellation is conditional for any reason, the seller may still be obligated to pay commission to the original brokerage if the property sells. Be sure the seller is aware of that obligation before they go ahead and list with you. If you don’t, you may risk breaching your fiduciary duties to that client.
Our Rules of Cooperation lay out what you need to do, and this is a great example of how knowing what the rules are will guide your practice:
6.07 Solicitation Guidelines
Members, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the client is subject to a current, valid exclusive agreement to provide the same type of real estate service. This rule does not preclude Members from contacting the client of another brokerage for the purpose of offering to provide, or enter into a listing arrangement where the original and current Listing Brokerage has negotiated a cancellation clause with the seller, and the seller has not otherwise indicated he/she does not wish to be solicited during the term of that contract.
So, unless “the seller has not otherwise indicated he/she does not wish to be solicited during the term of that contract” and the listing has been flagged with ‘Privacy Protected’ status as a result, that seller is open to solicitation.
Then Rule 3.18 comes into play. This is another example of how the rules protect you and our clients by ensuring that all parties are aware of their rights and obligations.
If you take a new listing on a property during the Cancel Protected period, the Board will not process that listing without a letter from the seller, acknowledging their obligations;
3.18 Cancellation of Listing: The cancellation of an MLS® listing will be processed by the MLS® Department upon the written request of the Listing Brokerage, in a form acceptable to MLS® Department, under the terms agreed to by all the contracting parties. The cancellation of an MLS® listing may not be Listing Brokerage loaded. Where an MLS® listing has been cancelled by the submission to the MLS® Department of a Cancellation Form, the MLS® Department will accept a new listing for the property with another Listing Brokerage during the Cancellation Period set out on the Cancellation Form (“Cancellation Period”) provided that the MLS® Department receives a letter signed by the seller(s) and the manager or managing broker of the new Listing Brokerage stating that the seller(s) understands, acknowledges and accepts that by signing the new listing contract within the Cancellation Period, the seller(s) agrees to pay commission under both the original listing contract and the new listing contract if an offer for sale is accepted or the property is sold during the Cancellation Period.
This will ensure that the seller is clear as to their obligations and you have it in writing. Everyone is protected.
Knowing, understanding and practicing in accordance with the rules will give you the confidence you need to serve clients and consumers well, show respect for your fellow REALTORS® and demonstrate professionalism. We all say we want to see a higher level of professionalism in our industry but remember, talk is cheap. Your actions will always speak louder than words.
Source: FVREB Professional Standards & Communications