legal
QUIZ 1.
o I need a written buyer agreement when the D buyer’s sister is touring the home and sending live video to the buyer?
Answer
Yes. Under MLS rules, agents must have a written buyer agreement prior to touring a home when the agent is “working with” the buyer. The “working with” language is meant to including agents who are providing “full or limited brokerage representation or services for the buyer (including transaction brokerage)—such as identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on behalf of the buyer, presenting offers by the buyer, or other services for the buyer.” NAR FAQ 73. “Touring a home means the buyer and/or the MLS Participant, or other agent, at the direction of the MLS Participant working with the buyer, enter the house. This includes when the MLS Participant or other agent, at the direction of the MLS Participant, working with the buyer enters the home to provide a live, virtual tour to a buyer not physically present.” NAR FAQ 74. Since the agent is helping facilitate a live, virtual tour for the buyer, a written buyer agreement is necessary. Q&A Release Date: 9/26/2024
2.
I s the Cooperative Compensation Agreement (Form 220) still effective if the buyer and seller do not go under contract and the date passes in paragraph 3?
Answer
No. It is important to set a specific termination date in Form 220. As a suggestion only, the termination date should be a short period of time, such as a few days or weeks. By inserting a specific date in paragraph 3 of Form 220, agents will know when a shared Form 220 can no longer become binding if a specific buyer and seller go under contract. Making sure that Form 220 expires as to a particular buyer 16 INSIGHT • May 2025
BY JOHN WAIT, GENERAL COUNSEL
These questions are based on weekly Q&As published in the REALTOR® Rundown between September 2024 & February 2025.
agent will help protect the seller and listing firm should a specific buyer have more than one agent. It is not necessary that the date in paragraph 3 extend to the end of a transaction. An earned fee in Form 220 remains enforceable through closing once the buyer and seller sign a purchase agreement. Q&A Release Date: 11/21/2024
3.
oes a seller have the same duty to disclose D material facts as a listing agent?
Answer
No. A material fact is any fact that could affect a reasonable person’s decision to buy, sell, or lease property. A material fact must be disclosed by a broker to the parties in the transaction and any interested third parties regardless of the broker’s agency role within the transaction. A broker always has a duty to disclose material facts, but a seller does not always have that duty. A seller must disclose material facts when such facts are only known to the seller and not within the diligent attention, observation, and judgment of the buyer. In other words, if there is a material latent defect on the property only known to the seller, and the buyer cannot discover the defect through reasonable diligence, the seller has a mandatory and affirmative duty to disclose. A seller’s duty to disclose material facts is separate and in addition to their obligation to complete the Residential Property and Owners’ Association Disclosure Statement (RPOADS). This means that the seller can choose to mark “no representation” in the RPOADS, as allowed by statute, but the seller still has a duty to disclose material latent defects not within discovery of the buyer by reasonable diligence as explained above. If the seller checks “no representation” throughout the RPOADS, then they will need to disclose latent material defects another way.