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Legal IssuesShould you or shouldn’t you pay a subagent?
From time to time, we will get calls on the Hotline about the “legality” of a listing agent refusing to compensate a subagent. The reason most frequently given by listing agents is a belief that they are protecting their sellers from liability. The easy answer to the question is that the law does not require a listing agent to compensate anyone, nor does the NAR Code of Ethics.
Those of you with an historic perspective probably remember the days when a seller was responsible for the actions of their agents, including subagents. Ten years ago this nearly limitless well of potential liability was capped and drained by Act 112. When RELRA was revised, the legislature specifically protected sellers by adding the following language: “A consumer [think seller] of real estate services shall not be liable for the acts of a licensee unless the licensee is acting pursuant to the express direction of the consumer or the licensee is acting based upon a representation of the consumer reasonably relied upon by the licensee.” Today, a seller is not responsible for the actions of a real estate licensee they never met or with whom they never interacted.
That sellers are now protected from the acts of subagents creates an interesting potential for liability for a listing agent. If a listing agent is refusing to compensate a subagent as a matter of practice without consulting the seller, or is misguiding the seller by suggesting such liability may exist, then the listing agent may be committing malpractice. Is there any reason why, as a listing agent, you would not want to compensate someone who may have a buyer?
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Brett Woodburn, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. |
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Thank you Breet, I always enjoy your articles, you bring up an intersting point. I have a concern with liability for MYSELF in this scenario, not the seller. A sub agent, from another firm, whom my Broker has no control over, is then party to all information, rights and responsibilites of me, the seller agent. I have found that most of these sub agents will conduct themselves as buyer agents, not seller agents, either harming the seller, doing things relating to the transaction itself that make a deal fall apart (hurting the seller again) or, as I stated earlier, conducting themselves in some way that brings liability on me as a seller agent. They should just be buyer agents, contractually obligated to the buyer, and get it over with. Sub agency, in my opinion is just a problem waiting to happen in the average residential real estate transaction.