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“Key Salesperson” Provision in Listing Agreements

“Key Salesperson” Provision in Listing Agreements

When selecting a listing agent, sellers/ landlords typically base their choice on the individual salesperson that will be performing the real estate services (as opposed to the salesperson’s real estate brokerage company).  Certainly there are exceptions, especially large companies that own property in multiple states that hire national or international brokerage firms for all of their real estate assets.  For the most part though, the real estate brokerage business is built upon relationships between a principal and an individual real estate salesperson.

Sellers/ landlords must understand that all listing agreements are made with the real estate brokerage company and not the individual salesperson.  The agency relationship is between the seller/landlord and the brokerage company.  A brokerage company is the entity authorized to perform real estate services in Arizona (see ARS 32-2101(47)).  The salesperson only acts on behalf of his/her brokerage company (see ARS 32-2101(51)).

Due to the volatile real estate market, more and more salespersons are leaving their brokerage companies for various reasons (better deal at another company, starting own company, relocating, etc.).  This is a concern for sellers/ landlords.  If the salesperson that they hired has left the brokerage company, the brokerage company will assign a new salesperson to handle the listing.

Sellers/ landlords can protect themselves by inserting a provision in the listing agreement that allows the seller/ landlord to terminate the listing agreement if a key salesperson does not handle the listing.  I have drafted the following provision to insert into listing agreements to address this issue:

Broker may not assign its rights or obligations under this Agreement without the prior written consent of the Owner, which consent may be withheld in the sole and absolute discretion of Owner.  Owner has entered into this Agreement with Broker based entirely on the unique services to be provided to Owner specifically by [Jane Salesperson] (“Ms. Salesperson”).  Broker acknowledges that no other salesperson associated with Broker has been approved by Owner to represent Owner in connection with the lease/ sale of the Property.  Owner would not have entered into this Agreement but for the assurance that Ms. Salesperson would actively work on Owner’s behalf to lease/ sell the Property.  Accordingly, if at any time Ms. Salesperson is no longer employed by Broker or is not actively working on behalf of Owner to lease/ sell the Property, then, notwithstanding anything to the contrary contained in this Agreement, Owner may at any time thereafter elect to terminate this Agreement upon written notice to Broker.  The Term shall be deemed to have expired as of the date of Broker’s receipt of notice of Owner’s election to terminate.

This provision also prevents a broker from making a “bait and switch,” where a senior salesperson secures a listing and then staffs the marketing of the property with an inexperienced, junior salesperson.

Prior to using this language in any agreement, consult with an attorney.

Ryan Rosensteel is a real estate and construction attorney licensed in Arizona.  You can contact him at ryan.rosensteel@azbar.org.

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One Response

  1. Very helpful and practical advice. Thank you Ryan.

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