Your Legal Helpdesk is hard at work receiving and answering questions from REALTORS®. Here are a few questions and answers from the Legal Helpdesk.
Landlord/Tenant - Up-front Charges
Bidding - Payment Not to Bid
Q: When bidding on real estate at a court house auction, is it illegal to pay someone not to bid, or to get paid not to bid?
A: Yes, it is likely against federal anti-trust laws to either pay someone or to receive payment to not bid on real estate at a public auction. The Sherman Act, and other federal laws like the Clayton Act, are considered the federal anti-trust laws. The Sherman Act specifically prohibits any agreement among competitors to fix prices, rig bids, or engage in other anti-competitive activity. Bid-rigging, such as by paying someone or receiving payment not to bid at a public auction, has been prosecuted as unlawful, anti-competitive behavior. Please see below for several articles with more information as well as a recent case in Mobile, AL.
Q: Are there any laws, rules or ethics regarding a ‘Pocket Listing’?
A: Yes. NAR has great material on pocket listings. Basically, pocket listings can conflict with your MLS rules, can be unethical and/or illegal in certain circumstances, especially when the REALTOR® is the one pushing it as an option, and, due to the situation-specific chance of illegality and/or ethical impropriety, should be scrutinized closely. If you have a question about a specific situation, I recommend consulting an attorney familiar with federal and state real estate law.
Q: If there is a signed listing agreement and a "For Sale" sign is posted on the property, can the listing agent/broker refuse to allow the property to be shown to a potential buyer?
A: Yes, but only in certain circumstances. A listing agent/broker must comply with federal and state laws and NAR Code of Ethics on anti-discrimination when showing a house. Thus, a listing agent or broker cannot discriminate against a protected class by refusing to show a house to someone because of the particular, protected class, such as race, religion, national origin, age, disability, familial status or sex. If a client requests a listing agent or broker to discriminate against a protected class, the listing agent or broker would violate the law if he or she adheres to the request. Also, a listing agent/broker has ethical and statutory duties to his or her client, and a unilateral decision not to show a house to a prospective buyer can violate these duties.
That being said, limitations are allowed in certain circumstances. For example, showings can be limited to potential buyers who are pre-qualified for a loan, as long as a particular lender is not required. Also, REALTORS® should always be mindful of their safety and the safety of their clients, so personal safety should always be a consideration when showing a house.
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