Should you or shouldn’t you pay a subagent?

From time to time, we will get calls on the Hotline about the “legality” of a listing agent refusing to compensate a subagent. The reason most frequently given by listing agents is a belief that they are protecting their sellers from liability. The easy answer to the question is that the law does not require a listing agent to compensate anyone, nor does the NAR Code of Ethics.

Those of you with an historic perspective probably remember the days when a seller was responsible for the actions of their agents, including subagents. Ten years ago this nearly limitless well of potential liability was capped and drained by Act 112. When RELRA was revised, the legislature specifically protected sellers by adding the following language: “A consumer [think seller] of real estate services shall not be liable for the acts of a licensee unless the licensee is acting pursuant to the express direction of the consumer or the licensee is acting based upon a representation of the consumer reasonably relied upon by the licensee.” Today, a seller is not responsible for the actions of a real estate licensee they never met or with whom they never interacted.

That sellers are now protected from the acts of subagents creates an interesting potential for liability for a listing agent. If a listing agent is refusing to compensate a subagent as a matter of practice without consulting the seller, or is misguiding the seller by suggesting such liability may exist, then the listing agent may be committing malpractice. Is there any reason why, as a listing agent, you would not want to compensate someone who may have a buyer?