Attorney referrals, service and emotional support animals, and exclusive buyer’s agreements
Illinois REALTORS® Legal Hotline Attorney
The Illinois REALTORS® Legal Hotline has recently received a lot of inquiries about the steps necessary to combine brokerages, create referral relationships, and work with other settlement service providers. In addition, the hotline is often contacted by a member after they are faced with the intimidating prospect of a preliminary hearing with the Department of Financial and Professional Regulation (“IDFPR”). Often, the general legal information from the hotline includes the suggestion that the REALTORS® retain the services of an attorney.
The use of an attorney is necessary when legal advice is needed. Article 13 of the Code of Ethics provides that REALTORS® shall not engage in activities that constitute the unauthorized practice of law, together with the fact that the REALTORS® license limits them to providing brokerage services. Therefore, a REALTOR® is prohibited from the drafting (or amending) of any type of agreement which would be legally binding on either their client with another person or another licensee. On other occasions, independent legal counsel eases the mind of the REALTOR® and makes a transaction smoother. In addition, an attorney has the requisite license and, hopefully insurance, to cover the attorney’s practice. The real estate broker practicing law without a license has neither protection.
One of the most intimidating, but sometimes necessary, business decisions a REALTOR® can be faced with is finding and retaining the services of an attorney.
Illinois REALTORS® does not keep a list of attorneys for referral purposes. However, there are some valuable resources that REALTORS® could use.
For example, the Illinois State Bar Association has an Illinois Law Finder Directory on its webpage which allows a search for an attorney by specialty area of practice. The lawyers list themselves on that page and offer a 30-minute consultation for a fee of $25. Another resource option for those up in the northern part of the state is the Chicago Bar Association-Lawyer Referral Service, which offers a similar service. Finally, for those REALTORS® who find themselves faced with a potential lawsuit or IDFPR hearing, it is a good idea to consult with their managing broker and insurance carrier for a legal referral. Also, the broker’s errors and omissions insurance carrier sometimes providers a legal defense or service for the insured depending upon the circumstances.
Service and emotional support animals
Fair Housing laws and emotional support service animals continue to be a hot topic on the hotline. Perhaps this is because the use of such animals for emotional support is becoming commonly accepted across the nation. It could also be the result of the relative ease with which an applicant can certify an animal as a support animal through a variety of online applications. Either way, the breed, size and species of animal that is currently being certified for support or service has broadened and landlords have become inundated with requests for accommodation.
The general rules for accommodation still apply under Fair Housing laws:
- The landlord (and their agent or property manager) cannot legally deny access to housing based upon the fact that an applicant has a service animal.
- The landlord (agent or property manager) cannot legally ask for a larger security deposit because a tenant will have a service animal (but may be able to recoup expenses for any repairs necessary due to damage caused by the animal after a tenant leaves the property).
- The landlord can ask for verification that an animal is needed as a support animal and used for that purpose (but should exercise some caution and judgement in doing so and not make the inquiry in cases where the answer is obvious. The verification can be as simple as a doctor’s prescription or note.
It is apparent that many landlords feel that they are at some disadvantage under the fair housing guidelines, and the hotline has received a lot of inquiries about whether every animal must be accommodated. The important factor to consider in addressing this inquiry is to remember that a service animal, or even an emotional support animal, is not viewed as a pet, but rather, as a tool or device to assist a person with a disability. However, HUD is starting to recognize that in some cases, restrictions on certain animals is both reasonable and necessary. Recently, HUD has published a memorandum on the subject and it can be accessed on their webpage.
For example, a landlord may be allowed to restrict a poorly trained or ill-behaved “certified” animal from a common area in an apartment building. These situations need to be evaluated on a case-by-case basis and if there is a question about the validity of certification, or if the facts of the situation support some restrictions, seek independent legal advice.
Advantages of exclusive buyer’s agreements
The hotline continues to receive inquiries from REALTORS® who are frustrated after a buyer that they were consistently working with starts to work with another licensee and ultimately makes an offer through the other agent. Often, the property is one that the first licensee showed them. These situations can lead to the frustrating question of “procuring cause” if there is an MLS offer of compensation and ultimately to the loss of a commission.
The situation described above might be avoided through the use of an Exclusive Buyer’s Agreement. The agreement protects the hard work of the buyer’s agent throughout the agent/buyer-client relationship. Often, a buyer’s agent is reluctant to introduce their client to the concept of signing an agreement for one reason or another. In some cases, they are at a loss for the words to describe why such an agreement can work for both parties. As a buyer’s agent, you should explain the benefits of your services, and your knowledge of the market area in which you practice.
Here are some reasons the buyer should enter in to such agreements:
- Buyer’s agents devote a great deal of time and resources to finding the perfect property for their clients, including doing market analyses.
- Many buyer’s agents pay fees to belong to associations, MLS and other service providers so they have the very best resources at their disposal to help their clients find the perfect property.
- As a buyer’s agent, you act as your client’s advocate above your own interests, and you are 100 percent in on making certain your buyer gets the property that suits them at the price that they can afford.
From the buyer’s agent’s perspective:
- Exclusive relationships are protected under law and ethics while non-exclusive ones are not.
- In the event your company does not get paid form the listing side of the transaction, the exclusive buyer brokerage agreement can provide another avenue for you company to be paid. It also helps the buyer understand how your company gets paid and that they are potentially on the hook to pay you for the valuable services that you are providing to them.
- Illinois REALTORS® Legal Team has prepared a sample Exclusive Buyer Representation form that can be accessed with your member login.