What happens if a buyer closes with another agent after signing an exclusive agency expression agreement with you? REALTOR® association attorneys are fielding questions like this on their legal hotlines, according to attorneys speaking at the 2025 REALTOR® Broker Summit in Louisville, Ky., on Tuesday.
Brokerages face many risks to their businesses, from copyright infringement to disclosures and lately breaches within buyer representation agreements. “Brokers have to be cognizant about risks and determine how to insulate and mitigate against those risks,” said Jace White, general counsel for the Oklahoma Association of REALTORS®.
Is There an Exclusive Agency Relationship?
Enforcement of written buyer agreements—required when working with a buyer as part of practice changes that went into effect last August—has become a growing issue for brokerages, White said.
It’s important to look at the nature of the agreement: Has an exclusive agency relationship been established?
If your brokerage has a signed exclusive agency representation agreement with a buyer who ends up purchasing a home with an agent from another brokerage, “Will you pursue legal remedies against them?” White posited, or will you “be a brokerage that says, ‘Spilled milk is spilled milk,’ and you’re not going to be in the business of suing clients. … There are pros and cons to each.”
Some brokerages will choose not to risk the potential downside of a client posting bad reviews about them or their business on social media. Others may decide that pursuing a legal remedy will demonstrate to the agent that they care.
Whichever route brokers choose, White said, it’s important that they have a plan in place for handling such a scenario—preferably before they ever face it.
“Make those decisions sooner rather than later,” White said, “and have these conversations with your agents on the front-end” so they know how you’ll handle such a situation if it ever arises.
Be Proactive About Identifying Risks
“The worst kind of risk is the one you never saw coming,” Lori Levy, general counsel and vice president of legal affairs for Texas REALTORS®, told the crowd of brokers on Tuesday.
Seller impersonation fraud. A few years ago, local and state associations in Texas started fielding calls on their legal hotlines about seller impersonation fraud. Scammers use publicly available records to impersonate an owner of a vacant or unoccupied property and collect funds at closing. “We saw the risk emerging and were able to warn others,” Levy said. Texas REALTORS® partnered with title companies to educate and warn members—and brokers played a big role in warning their agents.
Copyright infringement. Maria Flaks, senior director of legal affairs at Northern Virginia Association of REALTORS®, said she’s also noticing an uptick in copyright infringement cases and brokers reporting receiving “cease and desist” letters with fines from using certain photos in their marketing materials. “Make sure you have the right to use that photo,” Flaks said. “Brokers, you need to document that you have permission.” NAR offers resources on protecting your business against copyright violations.
Liability for contractor recommendations. Flaks warned brokers that they may be liable when recommending contractors. She cited a case in 2022 of a real estate agent unknowingly recommending an unlicensed and uninsured roofer to a client. The roofer’s work was blamed for causing a fire that burned down the home. The homeowner sued and a court found the broker liable for not disclosing that the roofer was unlicensed and uninsured.
“Before you [recommend contractors], make sure they are licensed and have liability insurance,” Flaks said. Also, she advised brokers to warn their agents to:
- Never hire a contractor directly on behalf of their client
- Include disclaimers when making recommendations that you’re not responsible for the contractors’ work
- Try to provide at least three recommendations, allowing them to pick one
Attorneys speaking at the Broker Summit mentioned other questions coming into their legal hotlines, such as how to handle unrepresented buyers at open houses, dual agency, independent contractor agreements and more.
Educate and Document to Safeguard Your Business
Brokerages should educate agents about potential risks to themselves and the brokerages, Flaks said. She urged brokers to include a segment in their weekly meetings to provide updates on industry policy changes and new disclosure forms and law.
“Brokers have oversight in the transaction,” Flaks said. “You may be responsible for anything an agent [affiliated with your company] does that is considered part of the real estate service. So, think of the procedures you have in place.”
Consider having transaction checklists and process flow charts, as well as a system for carefully reviewing documents, Flaks said. Keep thorough documentation, she added, and “at the end of a transaction or client relationship, review your files carefully. Be sure to include any texts or emails outside of the case file. Make sure everything is together. If there’s ever an audit or litigation, you’ll have everything in one spot.”
Melissa Dittmann Tracey
Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine and editor of the Styled, Staged & Sold blog.
This information is only accurate as of 4/14/25. You must contact SCR for updates and changes to this information after 4/14/25 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)
This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.