The Phoenix Association of REALTORS® has chosen to produce a small number of substantive real estate transaction forms for use by non-REALTOR® licensees under the copyright of MLS Choice[1].  While the use of Arizona REALTORS® forms is in no way required or mandated by law or REALTOR® policy, the introduction of new, unfamiliar purchase contract(s) and other forms into the Arizona real estate market may cause some chaos and confusion.  What are the risks to REALTORS® and the public when presented with non-Arizona REALTORS® transaction forms?  How should REALTORS® best represent their clients if these situations occur?  This article attempts to answer these questions from the perspective of a listing broker REALTOR®.

Listing Broker REALTOR®

• Do Not Provide Blank Arizona REALTORS® Contracts to non-REALTORS®

SCENARIO: The buyer is either unrepresented or represented by a non-REALTOR® licensee and wishes to make an offer on an Arizona REALTORS® Residential Resale Real Estate Purchase Contract (RPC).  This is not possible because only REALTORS® are authorized to generate Arizona REALTORS® standard real estate forms which are federally registered with the United States Copyright Office and protected under federal copyright laws. As such, providing blank copies of Arizona REALTORS® forms to non-REALTORS® is also a violation of its copyright and prohibited.  Please understand that the Arizona REALTORS® is not being petty or malicious, but it must enforce its legal rights or it will lose them.  Significant time, effort, and labor has been committed to producing these quality forms for the benefit of its REALTOR® members which is why the Arizona REALTORS® copyrights and restricts access to its forms.  For more information on the Arizona REALTORS® copyright, click here.

If you have a cross-transaction with a non-REALTOR® who is utilizing a standard transaction form generated by the Arizona REALTORS®, please immediately notify Arizona REALTORS® General Counsel Aaron Green at aarongreen@aaronline.com.

• Do Not Refuse to Submit Offers delivered on non-Arizona REALTOR® Forms

SCENARIO: The buyer makes an offer on an MLS Choice Residential Resale Purchase Contract or other non-REALTOR® purchase contract.  The REALTOR® listing broker may be hesitant to present the offer because they are unfamiliar with its terms.  However, Arizona law and the Code of Ethics requires the listing agent to “promptly submit” all offers to the seller.  A.A.C. R4-28-802(B); Code of Ethics, Article 1, Standard of Practice 1-6 “REALTORS® shall submit offers and counter-offers objectively and as quickly as possible.”

• Do Not Interpret Contract Terms that Are Unfamiliar

SCENARIO: The buyer makes an offer on an MLS Choice Residential Resale Purchase Contract.  To adequately present an offer, a listing broker should be competent to counsel the seller on their legal obligations if they accept.  Such is not likely here since the listing broker is unfamiliar with the purchase contract and it is unclear whether the seller can use MLS Choice ancillary forms.[1]  Ethically and legally, the listing broker must promptly submit the offer to the seller but should also advise them to have an attorney review the unfamiliar purchase contract and provide the seller with legal advice.  Code of Ethics, Article 13 “REALTORS® . . . shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it; A.A.C. R4-28-1101(H) “The services that a salesperson or broker provides to a client . . . shall conform to the standards of practice and competence recognized in the professional community. . .”  For more information on the Standard of Care, click here.  If the seller chooses to accept the offer submitted on the MLS Choice form but refuses to seek legal counsel, it would be best practice for the listing broker to confirm their recommendation, and the seller’s refusal, in writing.  The written notice should include specific warnings that the purchase contract is new, unfamiliar, lacks legal interpretation by courts, and as a result, the listing broker is unable to advise the seller on their contractual obligations.  Best practice would also include the seller’s acknowledgement that they received the written notice.

• Do Not Insist the Seller Make a Counteroffer on an Arizona REALTOR® RPC

In the scenario outlined above, the seller may not want to incur attorney’s fees or be obligated to terms contained in an unfamiliar purchase contract.  The seller may therefore wish to make a counteroffer on an Arizona REALTORS® RPC.  The listing broker REALTOR® is authorized to respond to the original offer by submitting an Arizona REALTORS® RPC that serves as a counteroffer.  However, it is best practice for the listing broker to remind the seller that any counteroffer is legally a rejection of the original offer.  Restatement (Second) of Contracts § 38 (1981).  So even if the most important terms relating to the purchase price or close of escrow date remain the same, the seller’s counteroffer on the Arizona REALTORS® RPC legally rejected the buyer’s original offer, the seller’s counteroffer may not be accepted, and the seller could not later accept the buyer’s original offer.  It should therefore be the seller’s decision, fully informed, of how to respond to the original offer.

• Do Not Provide Arizona REALTOR® Ancillary Forms to non-REALTORS®

The Arizona REALTOR® copyright applies to all its forms.  This means that even if the buyer accepts an offer/counteroffer that was presented on an Arizona REALTORS® RPC, that does not give the buyer the right to use other ancillary Arizona REALTORS® forms.  This is problematic since the Arizona REALTORS® RPC requires certain AAR forms to be used in the transaction.  Specifically, the buyer may not use (and the listing broker REALTOR® cannot provide a blank copy of) the Arizona REALTORS® Counter Offer, Buyer’s Inspection Notice and Seller’s Response form, Buyer Pre-closing Walkthrough, Additional Clause Addendum, Appraisal Contingency Notice, Notice/ Disclosure Form, Cure Period Notice, or any other Arizona REALTORS® form.  Presumably, the buyer must provide the full information required by the incorporated forms without using them and in violation of their contractual obligations.    

Again, if a non-REALTOR® is utilizing forms generated by the Arizona REALTORS®, please email aarongreen@aaronline.com.

Conclusion

To protect the Arizona REALTORS® copyright, it must enforce its rights and pursue those who use its forms without permission.  The Phoenix Association of REALTORS® implies their MLS Choice forms can substitute or be used interchangeably with Arizona REALTORS® forms.  They cannot.  Arizona REALTORS® forms have been used/revised for decades and have been interpreted/upheld by numerous Arizona courts.  Many of the Arizona REALTORS® contracts incorporate and require ancillary Arizona REALTORS® forms to be used and, combined, they protect both REALTORS® and their clients.

This leaves sellers, buyers, REALTORS®, and non-REALTOR® licensees in a precarious position.  Consumers must potentially hire lawyers to review and advise on new, unfamiliar contracts or risk being bound to legal terms they do not fully understand.  REALTORS® and non-REALTOR® licensees must honor their fiduciary duties to their clients both ethically and competently, while honoring federal copyright laws. 

Aaron M. Green, Esq., a licensed Arizona attorney, is the General Counsel for the Arizona Association of REALTORS®.  This article is of a general nature and reflects only the opinion of the author at the time it was drafted.  It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

[1] MLS Choice forms include “Copyright © MLS Choice All Rights Reserved.” on the bottom of their forms.  However, MLS Choice appears to be a Trade Name, and only persons and legal entities are capable of copyrighting a form.  A public catalog search of the United States Copyright Office does not include any copyrights from MLS Choice as of the publication date of this article.