C.A.R. Issues Briefing Paper

January 26, 2006

MLS/Computer and Business Technology CommitteeProposed Revision of C.A.R. Model MLS Rules  9The following is for study only and has NOT been approved by the MLS/Computer and Business Technology Committee, Executive Committee, or the Board of Directors.Issue: Revision of the C.A.R. Model MLS Rules regarding Selling Procedures (C.A.R. Model MLS Rules within Section 9) to incorporate NAR Standards of Practice 1-8, 1-15, 3-2 and 3-8.Recommendation:  That CAR Model MLS Rules within Section 9 be revised as set forth in these papers.Background Information:Effective January 1, 2006, NAR has established mandated and optional changes to MLS Rules related to Standards of Practice 1-8, 1-15, 3-2 and 3-8.  These changes are an outgrowth of NAR’s 2005 Joint Work Group of the MLS and Pro Standards Committees which was commissioned to study the extent to which the Code of Ethic’s duties to clients, customers and the public might be imposed on MLS Participants and subscribers who do not hold REALTOR® membership.At NAR’s 2005 Midyear meeting, the MLS Committee determined that these Standards of Practices become the basis for MLS rules, and at the October 2005 NAR Annual meeting, proposed amendments to the existing model MLS rules were approved.  Incorporating Standard 1-8 is mandatory, and incorporating Standards 1-15, 3-2 and 3-8 are optional. For your reference, these Standards of Practices are set forth as follows:1-8:  REALTORS® acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers andcounter-offers until acceptance but have no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing.  REALTORS®, acting as agents or brokers of buyers/tenants,shall recommend that buyers/tenants obtain the advice of legal counsel if there is a question as to whether a pre-existing contract has been terminated.1-15: REALTORS® in response to inquiries from buyers or cooperating brokers shall, with the seller’s approval, divulge the existence of offers on the property.  Where disclosure is authorized, REALTORS® shall also disclose whether offers were obtained by the listing licensee, another licensee in the listing firm or by a cooperating broker.3-2:  REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate any change of compensation for cooperative services to the other REALTOR® prior to the time such REALTOR® produces an offer to purchase/lease the property.3-8:  REALTORS® shall not misrepresent the availability of access to show or inspect a listed property.In 2005, the C.A.R.MLS Committee established a Work Group to consider these changes, and they favored incorporating the basic tenets of all of the proposed changes, mandatory as well as optional, as set forth below.Proposed Rules Changes:  The proposed revisions to the Section 9 C.A.R. Model MLS Rules are set forth in strikeouts and underlines as follows:9. SELLING PROCEDURES.9.1      Showings and Negotiations.  Appointments for showings and negotiations with the seller for the purchase of listed property filed with the service shall be conducted through the listing broker except under the following circumstances:(a) the listing broker gives the cooperating broker specific authority to show and/or negotiate directly with the seller, or(b) after reasonable effort and no less than 24 hours, the cooperating broker cannot contact the listing broker or his representative.  However, the listing broker, at his option, may preclude such direct negotiations by the cooperating broker by giving notice to all participants through the MLS.In the event all showings andnegotiations will be conducted solely by the seller, the listing broker shall clearly set forth such fact in the listing information published by the service.9.2  Disclosing the Existence of Offers.  Listing brokers, in response to inquiries from buyers or cooperating brokers, shall, with the sellers’ approval, disclose the existence of offers on the property.   Where disclosure is authorized, the listing broker shall also disclose whether offers were obtained by the listing licensee, by another licensee in the listing firm, or by a cooperating broker.  [FYI: Optional]9.3  Availability to Show or Inspect.  Listing brokers shall not misrepresent the availability of access to show or inspect a listed property.  [FYI: Optional]9.24  Presentation of Offers.  The listing broker must make arrangements to present the offer as soon as possible, or give the cooperating broker a satisfactory reason for not doing so. In the event a listing broker will not be participating in the presentation of offers, the listing broker shall clearly indicate this fact  in the listing information published by the service.9.35  Submission of Offers and Counter-offers.  The listing broker shall submit to the seller all offers until closing unless precluded by law, governmental rule or expressly instructed by theseller otherwise.  The cooperating broker acting for buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance.  [FYI: Mandatory]9.46  Right of Cooperating Broker in Presentation of Offer.  The cooperating broker has the right to participate in the presentation of any offer to purchase he secures.  The cooperating broker does not have the right to be present at any discussion or evaluation of that offer by the seller and the listing broker.  However, if the seller gives written instructions to the listing broker requesting that the cooperating broker not be present when an offer the cooperating broker secured is presented, the cooperating broker shall convey the offer to the listing broker for presentation.  In such event, the cooperating broker shall have the right to receive a copy of the seller's written instructions from the listing broker.  Nothing in this section diminishes or restricts the listing broker’s right to control the establishment of appointments for offer presentations.9.57  Change of Compensation Offer by Cooperating Broker.  The cooperating broker shall not use the terms of an offer to purchase to attempt to modify the listing broker's offer of compensation nor make the submission of an executed offer to purchase contingent on the listing broker's agreement to modify the offer of compensation.  However, failure of a cooperating broker to complywith this rule shall not relieve a listing broker of the obligation to submit all offers to the seller as required by Section 9.35.9.68  Cooperating Broker asa Purchaser.  If a cooperating broker wishes to acquire an interest in property listed with a listing broker, such contemplated interest shall be disclosed to the listing broker prior to the time an offer to purchase is submitted to the listing broker.(NOTE:  Nothing in these rules shall preclude the listing broker and cooperating broker from entering into a mutual agreement to change cooperative compensation.) [FYI: Optional]Proposed Motion:  (If approved by the MLS Committee) That CAR Model MLS Rules within Section 9 be amended as set forth above.