Q: I am a real estate broker and my seller would like to give me an Exclusive Agency listing to sell her condominium. Can you please explain what the difference is between an Exclusive Agency and an Exclusive Right to Sell listing? Also, is it required that I disclose the type of agency relationship in the listing agreement I enter into with the seller?
A: In an Exclusive Agency listing, the seller will not have to pay a commission to the seller’s real estate broker if the seller finds a buyer for the seller’s property. In an Exclusive Right to Sell listing, the seller will owe a commission to the seller’s real estate broker regardless of who sells the seller’s property.
Section 175.24 of the New York State Rules and Regulations (the "Rule") require a real estate broker to include in its Exclusive Agency and Exclusive Right to Sell listing agreements for residential property an explanation of the type of exclusive relationship that is being entered into between the real estate broker and the seller. The Rule defines "residential property" as real property used or occupied, or intended to be used or occupied, wholly or partly, as a home or residence of one or more persons improved by a (i) one to four family dwelling or (ii) condominium or cooperative apartments.
Accordingly, an Exclusive Agency listing agreement for a condominium must contain an explanation describing the Exclusive Agency relationship. The Rule sets forth the way the explanation shall appear:
"In all commission agreements obtained by a broker which provide for an exclusive listing of residential property, the broker shall have attached to the listing or printed on the listing and signed or initialed by the owner or owner’s agent the following explanation in the type size of not less than six point: "EXPLANATION: "An "exclusive right to sell" listing means that if you, the owner of the property, find a buyer for your house, or if another broker finds a buyer, you must pay the agreed commission to the present broker. An "exclusive agency" listing means that if you, the owner of the property find a buyer, you will not have to pay a commission to the broker. However, if another broker finds a buyer, you will owe a commission to both the selling broker and your present broker."
All real estate brokers should review their listing agreements to confirm that the language set forth above is included in the form and manner required by the Rule. The Rule applies to condominium and co-ops.
The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP