New Limitations on “Future Listing Rights”

Around the time that SB 5191 was passed, the Washington legislature also passed SSB 5399 (codified in RCW 61.38) to restrict a broker’s ability to cloud title to a property with a property owner’s obligation to enter into a future listing agreement or with a listing agreement that becomes effective at a future date.  Presumably the future seller does so in exchange for a broker’s services (say, to assist with subdivision).  The agreement might even become a recorded encumbrance, thus adversely affecting the homeowner’s ability to refinance the property or to sell the property through another broker. 

The new law governs “future listing right purchase contracts”, which are defined as:

a contract granting an exclusive right to list residential real estate for sale in the future and includes, but is not limited to, any document recorded in the county where the real estate is located relating to the contract including the contract itself, a memorandum concerning the contract, or a deed of trust to secure the terms of the contract.

This definition picks up most residential listing agreements, since most provide for exclusivity.   The law requires that such agreements:

  • May not have a duration exceeding 5 years and may not be renewed or amended,
  • May not form the basis of a lien on the subject property,
  • Do not run with the land (thus not binding on subsequent owner or interest holder),
  • Must be cancellable by property owner by notice within 10 business days of owner’s execution, and
  • Must conspicuously provide that owner is not required to list the property. 

In addition, the bill gives the attorney general rights of action and makes violations subject to the Washington consumer protection act. 

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