FURTHER REFLECTIONS: SHOWING A TENANT OCCUPIED PROPERTY

Question: I am a licensed real estate broker and read with interest your last column on the showing of a tenant occupied property which is listed for sale. It raised a number of questions on my part:

a. The MLSCO Listing Contract for Central Oregon provides that the listing broker is authorized to access the Property and “…allow cooperating brokers to access the Property for purposes of showing it to prospective buyers at reasonable hours.”  Does this make the broker representing only a prospective buyer a “Landlord’s Agent,” so that the listing broker doesn’t have to attend in person every time a buyer’s broker wants to access the Property?

b. On the features form to be completed for the listing of the Property with MLS, there is a box to be checked providing for “Showing Instructions,” which includes options such as “Use Lockbox,” “24 Hour Required,” “List Agent must accompany,” and so on, followed by a box indicating whether a lockbox is or is not on the Property.  This form is to be signed by the Seller.

If I have the boxes checked providing for a lockbox to be used, 24 hours Required, and that a lockbox is on the Property, but do not check the box requiring that the “List Agent must accompany,” am I covered as far as enabling any buyer’s broker to use the lockbox to access the property, without me being present as the listing broker, as long as the 24 hours notice is given?

Answer: Reader, you’ve been doing your homework!

There is more to what you ask and more to what the documents say, and they raise both legal and practical issues, with differing perspectives from that of the tenant, the landlord/seller, and the broker, all of which should be considered as any broker prepares to list a property for sale which is occupied by a tenant.

First, let’s explore the language in the Listing Contract.  The language referred to was only added to the form by a revision dated January 1, 2013.  It does appear this is an attempt to qualify a buyer’s broker as a “Landlord’s Agent,” for purposes of the Residential Landlord and Tenant Act.  There is no case law addressing this to my knowledge.  Does it technically seem to satisfy the definition of a Landlord’s Agent, which is any party provided with authority to act for or on behalf of the landlord? Perhaps.  I expect an argument can be made that it does, but it is certainly not as clear as I would want it to be if my goal as a listing broker was to make sure that any buyer’s broker would fall within the definition of “Landlord’s Agent.”

It could be suggested that additional language be added to the Listing Contract which expressly provides that buyer’s brokers are authorized to act on behalf of the seller in showing properties to prospective buyers.  And this language should also include conditions to any showing, which are far more detailed than just “during reasonable hours.”  As noted in the previous column, what constitutes “reasonable hours” is open to debate, plus, even if a showing is during “reasonable hours,” if the number of showings becomes abusive, the showings themselves can turn into wrongful access, leading to the possibility of claims by the tenant.  These additional conditions should be reflected on the features form, so that cooperating brokers are provided with notice of what the conditions to access are, and in addition, if the listing broker wishes to go in this direction, then it may be that it would be advisable to check the boxes requiring that the buyer’s broker first call the listing broker and notify the listing office, as well before any access is obtained.  This would at least provide some control to the listing broker over the process.

In addition to dealing with the Landlord’s Agent issue, it would be advisable to provide more information to a seller/landlord about the nature of a lockbox and the risks involved, and taking a cue from the California Association of Realtors, here is a link to an addendum used by that organization which deals not only with the use of a lockbox and provides disclosures to both the tenant and the seller/landlord, but also addresses access rights: http://www.elcamino.edu/faculty/dgrogan/CARFORMS/RE13%20KLA%20form.pdf.

The foregoing is from the perspective of the listing broker.  What about the seller/landlord?  While the seller/landlord may wish to have the property sold as quickly as possible, does the seller/landlord really wish to take on the potential liability of having a number of buyer’s brokers showing the seller/landlord’s property to prospective buyers characterized as the seller/landlord’s agent?  I would suggest a seller/landlord’s perspective might lead to a decision that (1) the seller/landlord does not want to have any buyer’s brokers be characterized as the agent of the seller/landlord, even on a limited basis; (2) would only want showings to occur when either the listing broker or someone affiliated with the listing brokerage company is also in attendance, and (3) would not want a lockbox to be placed on the property.

My point is these differing perspectives should simply be addressed up front between the listing broker and the seller/landlord, so that all parties are on the same page at the beginning of the relationship.

Finally, there is the perspective of the tenant, which is presumably significantly different from that of the seller/landlord and the listing broker.  The Listing Contract and the features form for MLS really do nothing to address the concerns of the tenant, and also (other than possibly establishing the buyer’s broker as a Landlord’s Agent) can not supersede the rights of the tenant under Oregon’s Landlord and Tenant law.  The previous column addressed the issues relating to the concerns of the tenant, and the Practice Tips provided and the terms suggested to be included in the separate written Agreement to Permit Entry and Show reflect an attempt to ameliorate the tenant’s concerns and mitigate any potential misunderstandings and future conflicts.

For insight into the perspective of a tenant who went through the process of having her home marketed for sale and showings occurring while she was a tenant, see the accompanying article below, entitled: “A Tenant’s Point of View.”

The overall best practice is for the listing broker to take all of the interests of the parties involved into account in setting up the arrangements for the showing of a tenant occupied property, recognizing that it is going to be a stressful process for the tenant, as well as likely a stressful process for the seller/landlord, and the more the issues can be addressed up front, the better for all concerned.

PRACTICE TIP: This relates to the requirement, as noted in the previous column, that consideration had to be paid for the separate written Agreement to Permit Entry and Show.  One suggestion, which actually will benefit not only the tenant, but also the seller/landlord, would be an offer by the seller/landlord to pay the annual premium for renter’s insurance for the tenant.  The benefits of such renter’s insurance is described in the October, 2012 edition of The Fine Print, archived at Total’s website.

Disclaimer: this column does not constitute the giving of legal advice, and your reading this column does not create an attorney/client relationship. You are encouraged to consult a lawyer or accountant should you have questions about how this information may be applicable to your particular situation.

A Tenant’s Point of View

As a former renter in a home that was listed for short sale in the Bend area I found the entire process to be disruptive and aggravating.  The following items are a short list of some of the more prominent things I experienced during the listing period.

My number one concern was safety.  Without 24 hours advance notice that someone is coming into your home as a tenant it can be difficult to make arrangements for pets and/or children (even adult children) to be absent during the showing.  Listing agents should be aware if anyone in the home is under age 18, disabled, or unemployed, or if a tenant happened to call into work sick that day and is in bed with the flu.  None of that information is the business of a buyer’s agent or should be disclosed to a potential buyer, in my opinion.  You may be a tenant, but you still have a right to personal privacy.  I wanted to be cooperative but was uncomfortable with any showing that might potentially overlap my child’s arrival home from school.

Also, while most people are honest, there is also the potential danger of a buyer’s agent, who really isn’t a buyer’s agent at all, but does have a key or access to a key, entering the tenant’s home with ill intentions.  This is not likely to happen, but it could that doesn’t mean at some point it couldn’t happen.

In addition to that, while I had a lockbox on my rental door, I had several agents just drop by and knock to see if they could look at the property – at least they said they were agents, but it was upsetting that they weren’t following the rules – and who do you complain to?  I also had someone just drop by claiming they were a collection agent looking for the homeowner, asking too many questions, which was even weirder.

The listing broker made every attempt to make me feel comfortable throughout the process, and I did appreciate this extra attention , but did I had to have lots of conversations with the listing broker about scheduling showings – which is disruptive, especially at work.

A lockbox on the door alerts anyone driving by that the property might be accessible or a situation that they can exploit may be available.  I realize this can happen to a homeowner occupying the property as well, but as a tenant, if something actionable were to happen, of course I’m going to have my attorney sue my landlord.

Just as difficult as the safety issue is the fact that as a tenant you are no longer allowed to enjoy your home 24 hours a day 7 days a week.  Maybe other people are able to roll with it, but I felt I had to keep my housekeeping to a higher standard because strangers were traipsing through 3-5 days a week, I couldn’t relax on a Saturday or the even on week day evenings because I had to leave while an agent showed my home, (which meant I had to run home after work, pick up my child, get my dog, and exit the property – and after a 9 hour workday, this was certainly not convenient or any kind of enjoyment for me).

Having a tenant provide a blanket authorization for people to enter the home seems like the landlord is asking too much.

I could not relax about my personal belongings because I had no way of knowing if some potential buyer might be looking to steal something, so everyday items with any value had to be stored away.  We had one showing where the drawers in the bathroom were open when I got home (thanks for looking at my toothbrush because now I think I’ll have throw it away).   And I experienced dirty floors from many pairs of shoes tromping through, lights left on, closet doors and lights left open and turned on, in one instance the front door left unlocked (what if a broker doesn’t lock the door, a stranger enters your home, and your kid comes home from school?), and a second instance where the backdoor was left unlocked.  Again, yes, this can happen to a home occupied by the homeowner, but as a tenant this sale isn’t doing anything for me except causing extra stress and strain on my living situation.

Even if I do agree to a lockbox on the door, what happens if I present a claim to the landlord that something was stolen from me the day a showing took place?  Does the agreement protect the landlord completely?

What if someone leaves the front door unlocked and a stranger is present in my home when I return and I’m beaten and robbed? Is the landlord still protected?  Why would any tenant agree to completely relinquish any right to keep their home secure at all times?

As a tenant I think creating an agreement where the landlord or the landlord’s broker is at all showings would be in my best interest.  I can still be cooperative, but with notice and with the assurance that the landlord’s agent will be held accountable.  Otherwise, I need to be present, don’t I?  While this topic is about protecting the landlord, someone also needs to protect the tenant, and I think that should fall on the listing broker.

I’ve heard more than one broker express frustration about uncooperative tenants in listings, but seriously, as a tenant, having strangers have access to your home 24 hours a day who are theoretically operating on an honor system where they all provide the required and proper notice before they enter, that’s asking a lot of a tenant.  If the situation ever comes up for me again, you can bet I’m not going to cooperate with a lockbox on my door, I want 24 hours notice that the Listing Agent is bringing people by to see the property with or without their broker, I will establish a relationship with the Listing Agent so I know who they are and whether I trust them, and I will not agree to anything until the Landlord agrees to reimburse me for the disruption and general housekeeping maintenance issues by a rent reduction or payment for each scheduled showing.  At the time my rental was listed for sale, and I asked about my rights as a tenant, I was lead to believe by the Listing Broker that I needed to be cooperative and was encouraged to be cooperative and agree to a lockbox, and I now realize they were providing advice that was in their best interest, making their job as a Listing Broker easier, and definitely not in my best interest or in the interest of my safety or protection as a tenant.

~ A Tenant in Bend, OR