Expert: Todd C. Menard - 3/20/2009

Question
My sister called a listing realtor to show us a home that we were interested
in.  My sister let the realtor know that I was working with my aunt as my
realtor from the beginning.  I also let her know that my aunt was rolling her
commissions into our closing cost so we would have no closing cost out of
our pockets.  The listing realtor stated that "she could get us minimal to no
closing cost if we used her as our realtor.  (Isn't that violating a code of ethic?
)  She also stated that she could better represent us because she does it all
the time (dealing with foreclosures). Isn't that another code of ethics that she
violated?   The listing realtor did show us the home; however, we went
another time with my aunt (the true realtor)  to look at the house to see if we
truly wanted the house and if it was the right fit for us.  We did end up
making an offer.  The listing agent who showed us the house was not the
procuring cause as to why we made an offer on the house.  But she (the
listing realtor) is now wanting a referral fee from my realtor who was rolling
her commissions into our closing cost.  Now we are out of pocket $2000
extra because this listing agent is wanting the referral fee even though she
did nothing to sell the house.  She knew from the beginning that we were
working with a realtor.  Isn't this realtor violating code of ethics?  Hasn't she
violated her Fiduciary relationships?  Is the listing realtor right by requesting
a referral fee?  Or do I have a case to file to the grievance committee?

Answer
Hello Les - You always have the right to file a complaint. There is more than one potential violation in your question. Article 16 "interfering with another REALTORS agency relationship" is only a violation of the Code of Ethics if the buyer has a contractual ("Exclusive")agency relationship with the buyers agent. Without this contract you may be working with another agent but you do not have a contractual/exclusive relationship which is required to have an Article 16 complaint. Basically, the difference between 'working' with and being an 'exclusive client'(representation contract)of a REALTOR. Procuring Cause is much more complicated issue to determine. Also, each state has different statutes, administrative codes, substantive policies, common laws, etc which also must be examined in an agency or procuring cause complaint. As far as the NAR Code of Ethics is concerned, Article 17 requires mandatory arbitration when two designated brokers have a commission dispute. The complainant is the proponent of the dispute so the REALTOR due the money would be the complainant. Has your aunt discussed this with her designated broker, managing broker or branch manager? This should be her first contact. Her broker will be able to lead the defense to protect their compensation and the credit due towards your settlement fees. The concept of paying the listing agent a referral fee is up to your aunts broker, which they may select as an option to prevent a procuring cause complaint. In no way does this interpret the listing agent is 'right' in asking for one. Why otherwise would the buyer broker pay it? There is another question that requested a procuring cause explanation which can be found on allexperts.com under my archive of previously asked questions. please refer to that question for the remainder of the procuring cause criteria. You do not have a complaint to file. The issue is between the listing office and your aunts office only.  Therefore, if your aunt has an exclusive contractual agency relationship with you she would file an Article 16 complaint against the other agent. It would be the complainants position to support her complaint with 'clear and convincing evidence'. If she did not have this agency contract then she would have no Ethics Complaint, but depending upon your state laws there may be other agency statutes violations, or not. I hope this has helped. Please remember this is not legal advice as I am not an attorney, rather this is to be considered real estate information any professional REALTOR should be able to provide. Please reply if you have additional questions. Thank you - Todd