What happens to a listing agreement when the listing agent dies?
QUESTION: A prospective client has approached me about listing their property for sale because the broker they were working with recently passed away. The deceased broker was a sole proprietor, but the client’s listing contract was with the firm, not the deceased broker. I have called the executor of the deceased broker’s estate to find out whether they will release the client, but I have not heard a response. The client needs to sell this house quickly and is becoming frustrated. Is there anything I can do for this prospect?
ANSWER: Unfortunately, if you cannot reach an agreement with the firm’s current representative, then we believe the answer is “no.” Under the license law, if a sole proprietor dies or becomes incapacitated, the NC Real Estate Commission will issue a temporary license to the administrator of the estate for the purpose of distributing trust money or paying commissions. 21 NCAC 58A .0512 However, this limited license does not give the estate the ability to help clients such as the one who has approached you, because the estate does not have the ability to undertake any other actions for which a real estate license is required.
The holder of the prospective client’s contract is the firm, not the deceased broker. Even though the broker may have died, the firm likely has not. Depending on the firm’s guiding documents, if any, there may be a contingency plan in place that will allow the firm to perform the contract. If that is the case, then the client may not be able to terminate the listing agreement without being in breach. This also means you would be prohibited from interfering with the current listing agreement under Article 16 of the Code of Ethics.
If the prospect wants to come to your firm right now, then your best option at this stage is to make an arrangement with the deceased broker’s firm through its current representative. The only other option is to refer the prospect to a lawyer to see if they can terminate the current listing agreement. If you are a sole proprietor yourself, make a note of how your death may affect your loved ones, and your clients, and create a contingency plan for your real estate firm as part of your estate planning.
Release Date: 6/20/2017
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