As experienced sales professionals, brokers understand that familiarity with the market, with their prospective clients, the nature of the real estate, even the zoning of the real estate, are all essential. However, I have come to learn that some brokers take their existing listing agreements, compliant in their home state, and attempt to use them in other situations, such as other states, WITHOUT checking for local compliance requirements. Should you be one of these brokers hoping that for listing agreements one size fits all, think again. Both a state’s broker license act and its administrative rules can and often do vary from state to state. Moreover, our precious broker lien rights vary from state to state; and in order to protect your rights to a fee, and rights to liens if needed, you will need research and care. This column is inspired by one of my national clients which is in the process of revising its exclusive sale listing agreement, and is wisely preparing a state-by-state compliance addendum for each listing. I am tasked with the research, and the writing of the combination of company policies with many states’ requirements.

The war stories of pursuing commissions with flaws in the written agreement (in some cases fatal flaws, if discovered) literally chill me to the bone. Can you imagine doing all of the work seeking and winning the listing, marketing and selling or leasing the property, earning the fee, and finding out that you have absolutely no legal right to claim and collect the fee because applicable law was overlooked ? I don’t have to imagine these situations, they occur and I have seen them. Let me offer a few examples.

You should know that when you are hoping to list or market or assist a buyer or tenant in acquiring property in a state where you are not licensed, you MUST have a local broker; and depending on the state(s) where the property is located, your role may change or have limitations. Getting past license portability, have you considered any of the following issues? Must your listing agreement have a fixed expiration date, or might it be permissible to have automatic renewal? Does state law require that you disclose agency, explain different agency alternatives, explain dual agency and its ramifications? Does the state allow designated agency, so that licensees affiliated with the same firm but representing different parties constitute something permissible, as opposed to dual agency that requires disclosure and consent?

There is a concept called “Minimum Services,” where some state laws require that a listing broker commit to explicitly promising and rendering certain stated minimum services in listing property, where failure to have that language in the agreement could be a fatal flaw? Do you know if your state, or other states, are minimum services states? Do you know if broker lien rights apply for the state where the property is located? Do you know if there must be a clear notice of the existence of lien rights in your listing or commission agreement? Only a few of the lien states have such requirements, but do you know which are those states? We all know that discrimination against members of protected classes is prohibited; but do you know what the protected classes in a given state are? Illinois has a list, stated in a rule which lists those protected classes, and requires the list to be included in your listing agreement; and Friends, that list changes from year to year, adding more protected classes.

The failure to know the territory is not just a stumbling block for local firms who occasionally stary into new states. I have seen national, even international firms with listing agreements that are incomplete, outdated, and in some cases, fatally flawed. There is a reason for continuing education, there is a need for good legal counsel, there is an absolute need for current agreements. Your time is too valuable to work hard and come up with no recourse. Harold Hill was right, “You gotta know the territory.” Yes, that’s from Music Man, for those who haven’t googled my title yet.