Is first-in-time first-in-right? Maybe

MLSs sometimes face the following scenario: Broker A puts a listing record into the MLS relating to 123 Elm Street. Broker B either (a) also puts in a listing record for the same property after Broker A or (b) complains to the MLS that Broker B is actually the listing agent and that Broker A’s listing should be deleted. The question is what should the MLS do?

I think the MLS wants to deal with two potential problems: First, MLS does not want two active listing records for the same property in the system at the same time. That’s because of complications arising from the offer of compensation. If there are two offers in MLS, which is the cooperating broker accepting? Does the cooperating broker get to choose? What if the instructions on the two listing records are different? What if there is a data error on one of them? Too complicated.

The second issue is that the MLS does not want to have to adjudicate which participating broker is the real listing broker. That’s a legal determination that the MLS could probably do without making; and it likely does not want to get into a legal battle. The way I used to handle this when I managed an MLS, and the way that many of our clients handle it, is this:

1. MLS explains to Broker A that Broker B has objected and reminds both brokers that if they are REALTORS®, the Code of Ethics governs their conduct; and whether they are REALTORS® or not, state law probably has something to say about it.
2. MLS asks both brokers to confirm in writing that each is claiming the listing and demand a copy of each listing agreement. Oftentimes, if you ask for a written confirmation, one broker will have an epiphany about the wisdom of this dispute and withdraw its claim or listing record.
3. If the Broker A listing agreement (the one relating to the first MLS listing record) looks basically legit (i.e., the correct property is identified, date corresponds to current timeframe, the name of the seller matches the public record, there are no obvious signs of forgery or naughtiness), MLS leaves Broker A’s listing record in the system and either removes or demands that Broker B remove the second listing record.
4. MLS explains to both brokers that if MLS receives a letter from the seller or her attorney designating Broker B as the actual listing agent, MLS will pull Broker A’s listing record. If MLS receives conflicting letters from folks claiming to be the seller or authorized representative of the seller, MLS will pull all listing records related to the property until it gets a straight answer from everyone involved.

This method, an example of what lawyers call “first in time is first in right,” resolves the concerns I mentioned above, ensuring that no more than one listing record for the property is active at one time without putting MLS in the position of comparing two listing agreements and deciding which is “valid.” It is not “fair” in that Broker B may actually be the valid listing broker, but the place for Broker B to sort that out is with the seller and Broker A, not through the MLS. If your MLS plans to use this approach, it’s helpful to discuss it with your board of directors and have them approve it as a policy, just as a little CYA for the management; you can then also publish it as your policy.

I’m curious if readers have other approaches, and if they are willing to share them. (You can always tell us what some unnamed neighboring MLS does, if you don’t want to share your own approach 😉 I’d also like to hear if you think this approach is grossly flawed and what you’d propose instead.

-Brian