Coming out September of 2023, IAR is releasing our Exclusive Listing Agreement. Several factors contributed to the remaking of IAR’s Exclusive Listing Agreement. The form had not been reviewed in several years and contained out of date language and there was a recent lawsuit which made an update necessary. There are a few sections that will be highlighted below giving insight to some of the changes and additions.
The new Exclusive Listing Agreement is currently live on Form Simplicity and Remine. This article provides an overview of large changes to the agreement. Further, a new form called the “Addendum to Exclusive Listing Agreement” has been created to provide extra protection for agents should they want to continue to provide additional services for their clients.
Obligations of Broker and the Owner/Seller (#17)
In 2022, the DeSousa case changed the liability landscape. IAR’s first step was to pass legislation to react to the Supreme Court case. IAR’s second step to protect members was to alter our listing agreement to create greater liability protections. The DeSousa case addressed whether a listing agent and their brokerage (Iowa Realty) has a level of possessory control of a property and owes a duty to a prospective buyer to assure the safety of the listed property when the agent is not present and showing the property. The court concluded that Iowa Realty was not a “land possessor” and did not have control over the property in the specific facts of the case . Therefore, Iowa Realty did not owe a duty of care to persons viewing the property. However, within the opinion there was an implication that if the listing broker had been present or provided a service, such as clearing snow out of the driveway, and a buyer fell the Broker may be liable.
In order to address this concern section 17 reads “Owner/Seller shall have sole responsibility for controlling, repairing, and maintaining in good order and condition the Property” this applies to the staging, marketing, and selling of the property. Following this statement there is a large list of obligations that are assigned to the Owner/Seller which includes but is not limited to care/maintenance of the lawn, shoveling walk ways, and securing any attractive nuisances. This section now puts the Owner/Seller on notice as to what their responsibilities are regarding their property during the transaction.
Addendum to Exclusive Listing Agreement
It is recommended that agents do not take on the additional services that have been allocated to the Seller in section 17. Some agents have clients who have come to expect these services so in the event that an agent wants to provide these additional services for their client, there is now an addendum that should be signed prior to the agent taking on any of these services. This addendum provides a section for the agent to list the additional services they will provide. By signing the Owner/Seller agrees to have general liability insurance on the property. Further, it states that the Owner/Seller will hold the Broker harmless from and against all claims that may arise except in the case of intentional misconduct. In addition, the Owner/Seller is acknowledging that they understand the Broker is not a contractor or has any specialized skills related to any of the services that may be provided. Finally, the Broker is given permission to engage third party providers to complete services, with the understanding that the Broker will be reimbursed by the Owner/Seller. However, understand that use of this Addendum or any similar release agreement does not fully insulate any agent from potential liability.
Indemnification (#12)
There is now a broader indemnification and defense provision. The language reads the “Owner/Seller will hold the Broker or the Broker’s affiliate companies, employees, officers, and agents harmless from any and all loss, damage, or expense including claims or demands arising out of any physical injury or property damage to any prospective buyer, buyer’s agent, property inspector, or any other third-party, while on or viewing the property”. This clause offers a greater level of protections for Brokers than what was previously included
Additional Notes
Several other important changes include updated fair housing language, a severability clause, and advertising practices. All of these changes will be included in the comparison document with more details provided. Many of these standard sections will be added to other forms where applicable. The overall goal was to create an agreement that is easily digestible for Sellers while offering greater protections for Brokers.
You can find the documents on Form Simplicity and on Remine.