2017 Risk Management Exchange Highlights – Part 4
The Risk Management Exchange at the 2017 Arizona REALTOR® Convention was so popular, we started sharing this abridged transcription for members who were there and those unable to attend.
Scott Drucker: As the name of this breakout session suggests, we really want this to be an exchange of information. These four individuals are going to give us a lot of risk management information on both a national, state, local level.
All four serve on the Arizona REALTORS® 2017 Risk Management Committee with Evan Fuchs being the chair. We also have John Mijac, who is instrumental in the Tucson Association of REALTORS® (TAR) Risk Management Committee.
Then we have Holly Eslinger and JT Tsighis. Both serve on the National Association of REALTORS® (NAR) Risk Management Committee. Holly is the current Vice Chair of that committee. JT also serves on the TAR Risk Management Committee and was chair of the 2016 NAR Risk Management and License Law Forum.
Pre and Post-Possession Forms
Member: Is there anything coming out with pre and post-possession forms?
John Mijac: After a lot of debate and discussion, the state association did produce some sample language that could be used, but because pre and post-possession agreements are very high liability, they don’t provide a form to support it.
JT Tsighis: It’s really one of the most difficult liability situations you could ever encounter.
Scott Drucker: On a related note, yesterday we were asked about whether we’re going to create a lease option contract. The answer is no, simply because there’s a lot of risk involved in those transactions and when we create standard forms, it encourages the practice. It also leads people to believe, “Oh well, they have a standard form for it. I don’t need an attorney.”
In those sorts of transactions, we want to encourage the use of an attorney. We’re not trying to make your life difficult; there are risk reduction reasons why we avoid certain forms.
“Coming Soon” Signs
Member: What about Coming Soon signs?
Holly Eslinger: NAR feels that this is a broker issue and will not be addressing the issue at the national level.
Scott Drucker: What’s the reason for the Coming Soon signs? Is it because you’re just trying to generate publicity for the property, or because you’re trying to keep everything in-house and capture both sides of the transaction? If you’re doing that, are you acting in the best interests of your clients? Are you satisfying your fiduciary obligation?
John Mijac: Typically speaking, Coming Soon signs are to get business for the agent, but there are also legitimate reasons why a seller might want to generate a buzz, just before they’re actually ready to put the property on the market. My consideration here is you can have a Coming Soon sign, as long as you have a definition of what “soon” is — and it can’t be two months or more.
You must also have a valid listing agreement, permission by the seller and a policy on whether there will be showings. In my brokerage, if you allow showings, then you must cooperate with all other brokers and allow them to show. If no showings, then the listing agent should not be showing either. That’s my understanding.
Scott Drucker: There are a number of issues that surround Coming Soon signs. They’re not just limited to fiduciary duty. We’re also seeing them sometimes in regard to fair housing.
Scott Drucker: Let me get some final thoughts before we finish. John?
John Mijac: If your local association doesn’t have a local risk management committee, I encourage you to do it because it’s the best way for small and large brokers to meet each other and solve problems before they become big issues.
JT Tsighis: I’ll be very happy to help your association formulate that risk committee; email me.
Basically, some of the items that we’ve been talking about should now be incorporated in your policy manual. Because this is a very organic situation that we’re experiencing, you may find it helpful to go to NAR.realtor, Windows to the Law, to get all kinds of information that you can customize for your individual brokerages.
Evan Fuchs: With regard to the Risk Management Committee at the state level, I want to make sure everybody understands what a tremendous member benefit it is for all us. The staff tracks and compiles input, so that if we end up having to revise a form or visit an issue, they have a folder with suggestions.
Feel free to contact me, Scott or anybody on the committee or this panel with your ideas, because that’s what drives the changes that come back to the field.Coming Soon signs, Evan Fuchs, Holly Eslinger, John Mijac, JT Tsighis, post-possession, pre-possession, Scott Drucker