Release Date: 12/13/2016
QUESTION: An agent is leaving my firm and has requested that I let them take their clients with them to their new firm. Do I have to let the agent take their clients? Is the agent allowed to contact the clients and try to take them to the new firm?
ANSWER: The answer to both your questions is likely “no.” Article 16 of the Code of Ethics states that “REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.” Standard of Practice 16-20 makes clear that this means a REALTOR® “shall not induce clients of their current firm to cancel exclusive contractual agreements between the client and that firm” once the REALTOR®’s relationship with their current firm is terminated.
Generally speaking, agency agreements are entered into on behalf of the firm through the agent. This means that the agency contract belongs to the firm, not the individual agent. If the agency contracts in your situation belong to the firm, the departing agent may only take those contracts to the new firm if: (1) you, the departing agent, and the client consent to the transfer; or (2) your independent contractor agreement or policy manual states that the departing agent can take their business with them upon termination with the client’s consent.
The Code of Ethics does not specifically bar a departing agent from informing his or her current clients that they are leaving, however, the information the departing agent provides should be for that narrow purpose to avoid the prohibition in Standard of Practice 16-20. If the departing agent is contacted by one of your clients after they join their new firm, Standard of Practice 16-6 would allow the departing agent to discuss the terms of a future contract once the current contract expires, as long as the departing agent did not initiate the contact. If one of your clients contacts the departing agent to request that their current contract be transferred, the departing agent should refer the client to their new broker-in-charge, or you, so the client can be informed that the current contract cannot be transferred absent your firm’s consent.
NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
© Copyright 2016. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.