MLS Caravan Risk Mitigation
Even with the ubiquity of virtual and brokerage video tours, the traditional MLS caravan (where agents drive their own cars to visit listings in person en masse) is alive and well in many parts of the country. Some members say previewing properties in person is the best way to keep their finger on the pulse of the local real estate market.
For the MLSs that host these tours, there are necessary precautions to take to limit your legal liability. NAR association counsels Mike Thiel and Katherine Johnson provide some guidance.
Q. If a REALTOR® association or MLS hosts an MLS caravan, what are its liabilities if members were to get injured (or injure a third party) while on the caravan driving their own vehicles?
As always, liability will be determined by a court of law based on the facts and circumstances of the situation. However, an MLS that organizes an MLS tour risks being subject to liability in the event that a tour participant is injured or injures a third party. If the injury takes place while the participant is riding in a vehicle, then the vehicle owner/operator could also be primarily liable for damages resulting from the injury. To involve the MLS, the injured party would have to argue that the vehicle owner or operator caused the injury and the MLS was vicariously responsible for the acts of the operator.
To reduce the risk of being sued by an MLS tour caravan participant, the MLS could request all participants to sign a waiver of liability prior to embarking on the MLS tour. In addition, the MLS may also ask participants to promise that they will indemnify the MLS in the event that the MLS is sued for an injury caused by them during the MLS tour caravan.
Q. If affiliate members (such as lenders and title companies) attend the caravan meeting and then go out on tour with the group, does that expose listing agents to liability? For instance, what if a lender learns something that the home owner really did not want their lender to learn?
We don’t see any problem with having an affiliate member join the MLS caravan, however it is up to each MLS to decide whether it will allow affiliate members to attend. If there are material facts regarding property conditions that are relevant to prospective lenders, those facts must be disclosed to the new buyers and will come to the attention of the lender, in any case.
Q. Do sellers give their agent the authority to have anyone other than MLS participants hear comments on the tour that might otherwise be considered member remarks (not visible to the public) in the MLS system?
The sellers have given their agent permission to market the property, and the MLS tour is one way of marketing the property. Unless otherwise addressed in a listing agreement, sellers typically do not restrict the type of marketing that will be undertaken by the agent.
Member remarks typically relate to the cooperative relationship between agents and not to the property itself. Affiliate members should understand that if they do overhear anything of that nature on a tour, it is not intended for publication, but in terms of liability, we don’t see any added risk to the listing agent.