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New ethical duty to provide written confirmation that offer was presented..

posted Jan 8, 2019, 3:59 PM by Brian G. Walsh   [ updated Jan 8, 2019, 4:00 PM ]
Jan 7, 2019

By Peg Ritenour, Ohio REALTORS Vice President of Legal Services/Administration

The recent spike in multiple offers caused by favorable interest rates and low inventory levels has been great for sellers, but not so great for the buyers whose offers were rejected. Disappointed buyers who lose out on their dream house and who do not receive a written rejection from the seller, are increasingly questioning whether the listing agent ever presented their offer to the seller. This suspicion is dramatically heightened if the buyer learns that the seller accepted a price lower than their offer or an offer written by the listing agent.

Like most states, there is no law in Ohio that mandates that either a seller or listing agent provide written confirmation that an offer was in fact presented to the seller. However, a recent amendment to Standard of Practice 1-7 of the NAR Code of Ethics addresses this issue.

Effective Jan. 1, if a cooperating broker submits a written request, a listing broker must provide a written response confirming that either the buyer’s offer to purchase was presented to the seller or that the seller waived the listing agent’s duty to present the offer. The pertinent language of Standard of Practice 1-7 reads as follows:

Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/landlord has waived the obligation to have the offer presented.

A listing broker who fails to provide such a written response could be found in violation of Article 1 of the NAR Code of Ethics, which is enforced by local Board of REALTORS through the Professional Standards process. Moreover, Article 2 of the NAR Code of Ethics prohibits REALTORS from making any misrepresentation regarding pertinent facts relating to a transaction. Thus, a REALTOR who provides a written affirmation or written statement under S.O.P 1-7 that is proven to be false could be found to have violated Article 2. (Such a false statement could also potentially be found to violate Ohio license law which likewise prohibits knowingly making any misrepresentations.)

To assure you are complying with your ethical obligations as a REALTOR, it is important to note a few key points with respect to the requirements in S.O.P 1-7:

  • The cooperating broker’s request to the listing broker asking for the written confirmation must be made in writing.
  • The listing broker must respond in writing in one of two ways:
    • Either provide written confirmation that the offer has been submitted to the seller/landlord; or
    • Provide written notification that the seller/landlord has waived the obligation to have the offer presented.
  • It applies to both offers to purchase and offers to lease.
  • It applies to all REALTORS, regardless of whether the transaction involves residential or commercial properties.

It should also be noted that neither the Code of Ethics nor the license law requires the seller to reject an offer in writing. However, it is recommended that the listing agent obtain the seller’s signed, written rejection as a best practice to document that the offer was presented. 

And finally, like the REALTOR Code of Ethics, Ohio license law requires licensees to present all offers and counteroffers in a timely manner. The only exception is if the client instructs the agent not to present an offer and that instruction does not conflict with any state or federal law (i.e. fair housing laws). An example of a lawful instruction from the seller would be for the listing agent not to present an offer under a certain price or an offer that includes a home sale contingency. An unlawful instruction would be not to present any offers from a person who is a member of a protected class. Again, it is highly recommended that any lawful instructions from a seller not to present certain offers should be obtained in writing from the seller.

Legal articles provided in the Ohio REALTORS Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.