Can a buyer list property for sale that they do not own yet?

QUESTION: A prospect approached me about a potential listing. He’s a builder who is under contract to buy a lot, and he wants to hire me to list the property before he closes along with some proposed floor plans. Can a buyer advertise property for sale even though they don’t own it yet? If this is permitted, does the current owner need to give permission or sign an agency agreement with me?

ANSWER: Yes and no. Form 101 (Exclusive Right to Sell Listing Agreement), Form 2-T (Offer to Purchase and Contract), and Form 12-T (Offer to Purchase and Contract – Vacant Lot/Land) all have checkboxes to indicate that the seller does not yet own the property. Ownership is not a requirement for a seller to sell a property interest. The seller just needs to (1) have a contractual interest or an option to purchase the property and (2) be able to deliver title by Settlement. If the seller cannot deliver title, then they will be in breach of contract under our standard forms, unless a condition is added to the contract that would permit the seller to terminate if the seller is unable to obtain title from the owner.

An agent who represents a non-owner seller like the one you describe should not represent the current owner. Representing both the non-owner seller and the current owner would make fulfilling your fiduciary duties very difficult if the two parties developed a conflict. In your case, the builder has a contractual right to the property he wishes to list. If he wishes to sell his right to ownership prior to his actually closing on the property, he is permitted to do so. Since you will only be advertising the builder’s property interest, and not the interest of the current owner, you do not need the current owner’s permission or agreement via a written agency contract.

The answer as to whether you can list the property is not difficult. However, if the builder intends to do more than advertise this property in the MLS, such as putting signs on the property or allowing persons to enter the property for inspection, then permission of the owner must be obtained. And if the standard form contracts are used, such permission might be necessary in order for the seller to be able to fulfill their Due Diligence obligations to a buyer.

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