Question: I have a pending listing agreement with a problematic seller. The listing agreement is written on the older-version C.A.R. Residential Listing Agreement (RLA) revised December 2023. If I ask the seller to sign the new Disclosure and Modification of Listing Agreement (DM-LA), can the seller use that as an excuse to cancel our listing? 

Answer: Yes, that’s a possibility. As a little background, on July 24, 2024, C.A.R. released newly-revised listing agreements. They also released a new DM-LA to be used with any older-version C.A.R. listing agreement printed before July 2024. The older-version listing agreements include a seller’s authorization for the listing agent to offer compensation to cooperating brokers through the MLS. The DM-LA notifies the seller that, at some time in August 2024, and as part of the NAR Settlement Agreement, your local MLS will no longer allow you to post coop comp in the MLS.

Generally speaking, if you have a pending listing under the older-version RLA form, you should, as soon as possible, ask the seller to sign the DM-LA form. But the DM-LA says it is a modification of the listing agreement. If an agreement like the RLA must be in writing and signed, then the law requires any modification of the listing agreement to also be in writing and signed. So if a problematic seller refuses to sign the DM-LA, it will not become a part of your listing agreement. As a side note, however, the older-version RLA does say, “If any provision of this Agreement is held to be ineffective or invalid, the remaining provisions will nevertheless be given full force and effect” (see paragraph 23 of the RLA).

As for this week’s Legal Tip, it’s a bit of a trick question. Yes, it’s true that a seller can use the refusal to sign the DM-LA as an excuse to cancel our listing agreement. Listing agents should be aware of that possibility. However, the seller can also use any other excuse (or no excuse) to cancel our listing agreement too. Why? Because C.A.R.’s listing agreement combines 2 agreements together into one. First, the RLA is a personal service agreement authorizing us to act as the seller’s agent, and second, it’s an agreement for the seller to pay us compensation.

As for the personal-service agency agreement, if a seller doesn’t want us to be the seller’s agent anymore, the law will not force the seller to work with us. The seller can unilaterally terminate our agency agreement at any time. However, if the seller cancels the listing agreement without our written consent, we are entitled to our full compensation under paragraph 3A(3) of the older-version RLA. The seller cannot unilaterally cancel the seller’s obligation to pay us. Hence, when dealing with a problematic seller, you can refer the seller to our entitlement to compensation under paragraph 3A(3) as a way to help convince the seller not to cancel our listing.

Copyright© 2024 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of August 5, 2024. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.