THE FINE PRINT – March 2013 Issue
FURTHER
REFLECTIONS: SHOWING A TENANT OCCUPIED PROPERTY
Question: I am a licensed real estate broker and read with
interest your last column on the showing of a tenant occupied property which is
listed for sale. It raised a number of questions on my part:
a. The MLSCO Listing
Contract for Central Oregon provides that the
listing broker is authorized to access the Property and “...allow cooperating
brokers to access the Property for purposes of showing it to prospective buyers
at reasonable hours.” Does this make the
broker representing only a prospective buyer a “Landlord’s Agent,” so that the
listing broker doesn’t have to attend in person every time a buyer’s broker
wants to access the Property?
b. On the features
form to be completed for the listing of the Property with MLS, there is a box
to be checked providing for “Showing Instructions,” which includes options such
as “Use Lockbox,” “24 Hour Required,” “List Agent must accompany,” and so on,
followed by a box indicating whether a lockbox is or is not on the Property. This form is to be signed by the Seller.
If I have the boxes
checked providing for a lockbox to be used, 24 hours Required, and that a
lockbox is on the Property, but do not check the box requiring that the “List
Agent must accompany,” am I covered as far as enabling any buyer’s broker to
use the lockbox to access the property, without me being present as the listing
broker, as long as the 24 hours notice is given?
Answer: Reader, you’ve been doing your homework!
There is more to what you
ask and more to what the documents say, and they raise both legal and practical
issues, with differing perspectives from that of the tenant, the
landlord/seller, and the broker, all of which should be considered as any
broker prepares to list a property for sale which is occupied by a tenant.
First, let’s explore the
language in the Listing Contract. The
language referred to was only added to the form by a revision dated January 1,
2013. It does appear this is an attempt
to qualify a buyer’s broker as a “Landlord’s Agent,” for purposes of the
Residential Landlord and Tenant Act. There
is no case law addressing this to my knowledge.
Does it technically seem to satisfy the definition of a Landlord’s
Agent, which is any party provided with authority to act for or on behalf of
the landlord? Perhaps. I expect an
argument can be made that it does, but it is certainly not as clear as I would
want it to be if my goal as a listing broker was to make sure that any buyer’s
broker would fall within the definition of “Landlord’s Agent.”
It could be suggested that
additional language be added to the Listing Contract which expressly provides
that buyer’s brokers are authorized to act on behalf of the seller in showing
properties to prospective buyers. And
this language should also include conditions to any showing, which are far more
detailed than just “during reasonable hours.” As noted in the previous column, what
constitutes “reasonable hours” is open to debate, plus, even if a showing is
during “reasonable hours,” if the number of showings becomes abusive, the
showings themselves can turn into wrongful access, leading to the possibility
of claims by the tenant. These
additional conditions should be reflected on the features form, so that
cooperating brokers are provided with notice of what the conditions to access
are, and in addition, if the listing broker wishes to go in this direction,
then it may be that it would be advisable to check the boxes requiring that the
buyer’s broker first call the listing broker and notify the listing office, as
well before any access is obtained. This
would at least provide some control to the listing broker over the process.
In addition to dealing
with the Landlord’s Agent issue, it would be advisable to provide more
information to a seller/landlord about the nature of a lockbox and the risks
involved, and taking a cue from the California Association of Realtors, here is
a link to an addendum used by that organization which deals not only with the
use of a lockbox and provides disclosures to both the tenant and the seller/landlord, but also addresses access rights:
The foregoing is from the
perspective of the listing broker. What
about the seller/landlord? While the
seller/landlord may wish to have the property sold as quickly as possible, does
the seller/landlord really wish to take on the potential liability of having a
number of buyer’s brokers showing the seller/landlord’s property to prospective
buyers characterized as the seller/landlord’s agent? I would suggest a seller/landlord’s
perspective might lead to a decision that (1) the seller/landlord does not want
to have any buyer’s brokers be characterized as the agent of the
seller/landlord, even on a limited basis; (2) would only want showings to occur
when either the listing broker or someone affiliated with the listing brokerage
company is also in attendance, and (3) would not want a lockbox to be placed on
the property.
My point is these
differing perspectives should simply be addressed up front between the listing
broker and the seller/landlord, so that all parties are on the same page at the
beginning of the relationship.
Finally, there is the
perspective of the tenant, which is presumably significantly different from
that of the seller/landlord and the listing broker. The Listing Contract and the features form for
MLS really do nothing to address the concerns of the tenant, and also (other
than possibly establishing the buyer’s broker as a Landlord’s Agent) can not supersede
the rights of the tenant under Oregon’s
Landlord and Tenant law. The previous
column addressed the issues relating to the concerns of the tenant, and the
Practice Tips provided and the terms suggested to be included in the separate
written Agreement to Permit Entry and Show reflect an attempt to ameliorate the
tenant’s concerns and mitigate any potential misunderstandings and future
conflicts.
For insight into the
perspective of a tenant who went through the process of having her home
marketed for sale and showings occurring while she was a tenant, see the
accompanying article below, entitled: “A Tenant’s Point of View.”
The overall best practice
is for the listing broker to take all of the interests of the parties involved
into account in setting up the arrangements for the showing of a tenant
occupied property, recognizing that it is going to be a stressful process for
the tenant, as well as likely a stressful process for the seller/landlord, and
the more the issues can be addressed up front, the better for all concerned.
PRACTICE TIP: This relates to the requirement, as noted in the
previous column, that consideration had to be paid for the separate written
Agreement to Permit Entry and Show. One
suggestion, which actually will benefit not only the tenant, but also the
seller/landlord, would be an offer by the seller/landlord to pay the annual
premium for renter’s insurance for the tenant. The benefits of such renter’s insurance is
described in the October, 2012 edition of The Fine Print, archived at Total’s
website.
David R.
Ambrose, CEO
Ambrose Law Group LLC
200 Buddha
Building
312 NW 10th Avenue
Portland, OR 97209
Direct Dial: 503.467.7237
Direct Fax: 503.467.7238
drambrose@ambroselaw.com
Disclaimer: this column does not constitute the giving
of legal advice, and your reading this column does not create an
attorney/client relationship. You are encouraged to consult a lawyer or
accountant should you have questions about how this information may be
applicable to your particular situation.
A Tenant’s Point of View
As a former renter in a home that was listed for
short sale in the Bend
area I found the entire process to be disruptive and aggravating. The following items are a short list of some
of the more prominent things I experienced during the listing period.
My number one concern was safety. Without 24 hours advance notice that someone
is coming into your home as a tenant it can be difficult to make arrangements
for pets and/or children (even adult children) to be absent during the
showing. Listing agents should be aware
if anyone in the home is under age 18, disabled, or unemployed, or if a tenant
happened to call into work sick that day and is in bed with the flu. None of that information is the business of a
buyer's agent or should be disclosed to a potential buyer, in my opinion. You may be a tenant, but you still have a
right to personal privacy. I wanted to
be cooperative but was uncomfortable with any showing that might potentially
overlap my child's arrival home from school.
Also, while most people are honest, there is also the
potential danger of a buyer's agent, who really isn't a buyer's agent at all,
but does have a key or access to a key, entering the tenant's home with ill
intentions. This is not likely to
happen, but it could that doesn’t mean at some point it couldn’t happen.
In addition to that, while I had a lockbox on my
rental door, I had several agents just drop by and knock to see if they could
look at the property - at least they said they were agents, but it was
upsetting that they weren't following the rules - and who do you complain
to? I also had someone just drop by
claiming they were a collection agent looking for the homeowner, asking too
many questions, which was even weirder.
The listing broker made every attempt to make me feel
comfortable throughout the process, and I did appreciate this extra attention ,
but did I had to have lots of conversations with the listing broker about
scheduling showings - which is disruptive, especially at work.
A lockbox on the door alerts anyone driving by that
the property might be accessible or a situation that they can exploit may be
available. I realize this can happen to
a homeowner occupying the property as well, but as a tenant, if something
actionable were to happen, of course I'm going to have my attorney sue my
landlord.
Just as difficult as the safety issue is the fact
that as a tenant you are no longer allowed to enjoy your home 24 hours a day 7
days a week. Maybe other people are able
to roll with it, but I felt I had to keep my housekeeping to a higher standard
because strangers were traipsing through 3-5 days a week, I couldn't relax on a
Saturday or the even on week day evenings because I had to leave while an agent
showed my home, (which meant I had to run home after work, pick up my child,
get my dog, and exit the property - and after a 9 hour workday, this was
certainly not convenient or any kind of enjoyment for me).
Having a tenant provide a blanket authorization for
people to enter the home seems like the landlord is asking too much.
I could not relax about my personal belongings
because I had no way of knowing if some potential buyer might be looking to
steal something, so everyday items with any value had to be stored away. We had one showing where the drawers in the
bathroom were open when I got home (thanks for looking at my toothbrush because
now I think I'll have throw it away).
And I experienced dirty floors from many pairs of shoes tromping
through, lights left on, closet doors and lights left open and turned on, in
one instance the front door left unlocked (what if a broker doesn't lock the
door, a stranger enters your home, and your kid comes home from school?), and a
second instance where the backdoor was left unlocked. Again, yes, this can happen to a home
occupied by the homeowner, but as a tenant this sale isn't doing anything for
me except causing extra stress and strain on my living situation.
Even if I do agree to a lockbox on the door, what
happens if I present a claim to the landlord that something was stolen from me
the day a showing took place? Does the
agreement protect the landlord completely?
What if someone leaves the front door unlocked and a
stranger is present in my home when I return and I'm beaten and robbed? Is the
landlord still protected? Why would any
tenant agree to completely relinquish any right to keep their home secure at
all times?
As a tenant I think creating an agreement where the
landlord or the landlord's broker is at all showings would be in my best
interest. I can still be cooperative,
but with notice and with the assurance that the landlord's agent will be held
accountable. Otherwise, I need to be
present, don't I? While this topic is
about protecting the landlord, someone also needs to protect the tenant, and I
think that should fall on the listing broker.
I've heard more than one broker express frustration
about uncooperative tenants in listings, but seriously, as a tenant, having strangers
have access to your home 24 hours a day who are theoretically operating on an
honor system where they all provide the required and proper notice before they
enter, that's asking a lot of a tenant.
If the situation ever comes up for me again, you can bet I'm not going
to cooperate with a lockbox on my door, I want 24 hours notice that the Listing
Agent is bringing people by to see the property with or without their broker, I
will establish a relationship with the Listing Agent so I know who they are and
whether I trust them, and I will not agree to anything until the Landlord
agrees to reimburse me for the disruption and general housekeeping maintenance
issues by a rent reduction or payment for each scheduled showing. At the time my rental was listed for sale,
and I asked about my rights as a tenant, I was lead to believe by the Listing
Broker that I needed to be cooperative and was encouraged to be cooperative and
agree to a lockbox, and I now realize they were providing advice that was in
their best interest, making their job as a Listing Broker easier, and
definitely not in my best interest or in the interest of my safety or
protection as a tenant.
~ A Tenant in Bend,
OR
