New Form 715 and Amending Existing Agency Agreements for MLS Rules Compliance
QUESTION: In the forms changes that were released last week, I can see that all the standard form agency agreements have been amended to comply with new MLS rules that are being implemented next month. What should my firm do with existing clients and old agency agreements that are not in compliance?
ANSWER: For existing clients and agency agreements that are on standard form agency agreements ©2023 and older, you can either: (1) amend the existing agency agreement with new Form 715 (Agency Agreement Amendment and Disclosure); or (2) execute a new agency agreement with the client on the newest version of the standard form agency agreement. Either method will bring your firm into compliance with the new MLS rules.
New Form 715 does two things. First, it discloses to the client that compensation is fully negotiable, not set by law, and is set by each broker or firm individually. Second, it amends the agency agreement to make clear that any additional compensation exceeding what the client has agreed to pay in the agency agreement must be disclosed and consented to by the client in writing before the firm or agent can receive it.
If Form 715 is used, all other terms of the existing agency agreement, including any amendments to that agency agreement, remain in full force and effect. If a new agency agreement is executed, it will instead replace the old agreement including any amendments thereto, and the old agency agreement will be null and void.
It is important to understand that every effort should be made to either amend an existing agency agreement or execute a new compliant agency agreement. In those rare cases where a client will not sign, then agents should explain why the amendment is in their client’s best interest, and even suggest the client seek legal counsel if they are hesitant.
If even after best efforts your client is still unwilling to sign Form 715 or a new agency agreement, you should at least email your client and inform them that the amount, format, or rate of real estate compensation is not fixed by law, but is set by each broker or firm individually and is fully negotiable. See FAQ 52 in NAR’s Settlement FAQs. You should then call the NC REALTORS® Legal Hotline for further guidance as to additional compensation issues.
Release Date: 7/4/2024
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