Insight | February 2025

TOP FIVE LEGAL TAKEAWAYS FROM 2024

BY “LEGAL JOHN” JOHN WAIT General Counsel

In my house, I oversee everything concerning the holiday season. I get the tree out of the attic and decorate it. I shop and buy all the presents for the entire family (including myself). I entertain family and plan the meals. I organize the annual ski trip. Etc., etc., etc. . . . For about two months, it is an additional full-time job for me.

And yet. With the holidays now fully in the rearview mirror and a new year upon us, I can confidently say that this past season was a welcome vacation from an otherwise frenetic 2024. Ha!

Think about it! When 2024 started, we were discussing NAR’s appeal of the antitrust verdict. In March, the appeal was over, and we were digesting the news of the settlement and waiting on details. In early summer, all of you were preparing to conduct business in a completely new way. By Halloween, you were adjusting to new buyer agency forms and MLS rules. And when the holidays rolled around, many of you had begun to find your groove and thrive in a totally new environment.

If you have not heard it lately, you all deserve gigantic kudos. You have my admiration and respect. I mean, you did already, but you know what I’m saying. Anyway, you looked a seismic shift in the industry in the eye, and took it head on. You did so by causing about a 30% increase in Legal Hotline calls. LOL! But still, you did it, and we were happy to help.

1. Broker compensation is, quite simply, negotiable.

By all means, value your services and make sure your client understands exactly how compensation works for you and your firm. Continue to put your client’s needs first and foremost. Part of that discussion for buyers should include an explanation that listing firms and sellers are not required to offer compensation to a cooperating agent.

Even if cooperative compensation is offered, it does not need to be a blanket offer and may vary based on the terms in a purchase contract. For sellers, make sure they understand the financial strains a buyer may be under and the advantages and

disadvantages of declining to offer concessions or cooperative compensation.

Once the new MLS rules were implemented, we received a lot of calls on the Hotline from agents seeking guidance on negotiating compensation. Having detailed compensation discussions with your clients and explaining your value are the most important things you can do to facilitate these nowcommon negotiations.

2. Scams are still a huge problem, and firms should continue to be extremely vigilant.

Last year, phone calls to the Hotline about scams remained constant. Fake sellers and buyers continue to be a major issue. Anytime you receive information for an out-of-state prospect who cannot meet you in person, you need to be very careful. Insist on at least a live video conference after receiving a picture ID. If you are not using the FOREWARN app, download it to your phone immediately. If you are a broker-in-charge, make sure scams are discussed regularly at your firm. In addition to fake seller and buyer scams, be aware of fake tenant and landlord scams as well.

We have received Hotline calls where the documentation for all these scams, at first blush, looked very convincing and authentic. One property manager only discovered a tenant scam after calling the bank associated with the tenant’s check. All other paperwork, and the background check, failed to discover the scam.

In short, if your Spidey Sense is going off, do not ignore it.

You should also be cautious in transactions that are not scams but present escalated risk. For example, wholesale listings and purchases present a variety of risks depending on the parties involved. NC REALTORS® standard forms are often not a good fit for these sorts of transactions. Make sure you have the tools necessary to help your client, including an attorney who can help your client interpret custom, nonstandard forms, if necessary.

3. Follow MLS rules and your firm’s policies as to written buyer agreements.

Under the new MLS rules, a written buyer agreement is required prior to touring a home if an agent is “working with” a buyer. “Working with” a buyer means providing services to the buyer as that buyer’s agent.

A written buyer agreement is not required if an agent is acting as a listing agent or a seller subagent, because in those cases, the agent is working for the seller and has a fiduciary duty to the seller and not the buyer. A written buyer agreement is also not required for vacant land, commercial, or rental transactions. The new MLS rules only apply to residential transactions where 1-4 dwelling units are present on the property.

The NC REALTORS® Forms Library was updated to help agents navigate this new landscape. The Exclusive Buyer Agency Agreement (Form 201) was greatly simplified, and a one-page Property Showing Agreement (Form 202) was adopted if a buyer is not ready for exclusive agency. Firms have adopted different policies as to how these forms should be used, and agents should follow those policies.

4. Plan for unrepresented buyers.

Unrepresented buyers have become more common. If you have not already, you might consider structuring your listing agreements to address this issue. Some unrepresented buyers might be a strong prospect to purchase a listing, other unrepresented buyers will not be, and still yet others could fall somewhere in between. Ultimately, the way a listing firm addresses unrepresented buyers is negotiable, but it should be addressed in a clear policy that is communicated to a seller in writing and made part of the listing agreement. A good policy will have objective criteria to evaluate an unrepresented buyer and further address any fees or costs that might arise.

Listing firms should also make sure that the NC REALTORS® Forms Policy is followed as to unrepresented buyers. A seller can fill out a purchase contract and send it to an unrepresented buyer, but giving a non-REALTOR® a blank form is strictly prohibited.

5. Be aware of other antitrust landmines.

Since firms can advertise cooperative compensation anywhere except the MLS, if the seller desires to, then great care should be taken in how that advertisement is made to other brokers and firms. And, if cooperative compensation is negotiated, great care should be taken in how the agent discusses

cooperative compensation with their client. This means long-standing principles from your antitrust education are more important now than ever.

For example:

There are no standard commission rates.

Your commission is negotiable with your client, and it should not be based purely on what anyone else in your market may be charging.

Any local board meeting may be construed as a gathering of competitors, and there should be no discussion of commission rates.

Agreements with competitors to fix commission rates are clearly illegal.

Agreements with competitors to freeze out other competitors are clearly illegal.

Do not suggest that a seller must offer a certain amount of cooperative compensation or else no buyer agent will show their property.

In addition, it is important to remember that the antitrust settlement released REALTOR® members and firms from liability they might have otherwise had to face by being part of the MLS. To maintain that release, members and firms must follow the terms of the settlement, which includes not using any online platform that facilitates cooperative compensation like the old MLS used to. The risk of using an online platform that operates like the old MLS cannot be understated. Antitrust cases are expensive, and many insurers no longer offer protection against these sorts of claims.

LEGAL HOTLINE

NC REALTORS® have free, unlimited access to the NC REALTORS® Legal Hotline. Did you know one call to a real estate lawyer costs an average of $300 per hour? With just one call to the Legal Hotline, you’ve paid for one year of NC REALTORS® dues in full. Don’t waste your time stressing over forms, disclosure or landlord/tenant law. Call the NC REALTORS® Legal Hotline to get quick resolution, so you can return to your clients and your business.

PHONE: 336.294.1415

EMAIL: legalhotline@ncrealtors.org