Lockboxes are a great convenience for Colorado brokers to gain access to a property offered for sale when they have a potential buyer who is interested in viewing the property. However, the Division of Real Estate (Division) has seen an increase in complaints regarding lockbox violations, averaging nearly 3 per month, resulting in more brokers being disciplined. This trend is concerning and the Division would like to provide some best practices to assist real estate brokers in avoiding lockbox violations.
Listing Broker Responsibility
It is the responsibility of the listing broker to make sure that prospective buyers are accompanied by a licensed broker when accessing and viewing the seller’s property. The seller wants a licensed and accountable real estate professional at the showings for security purposes. If the listing broker will not be present at the showing, they should verify that any broker gaining access to the property is verified as to their identity and is an actual licensed real estate broker.
It is imperative that the listing broker discuss with the seller both the means of property access and what persons (licensed brokers or other third parties) are authorized to gain access to the property. Those detailed instructions should be recorded in sections 9.2.1 and 9.2.2 of the Exclusive Right-to-Sell Listing Contract.
The primary risk to the listing broker is the unauthorized or improper use of the lockbox code for property access. It is imperative that the listing broker controls the access to the seller’s property and has full knowledge of who conducted showings or was otherwise granted access to the property. The security of the access code information to the lockbox rests on the shoulders of the listing broker.
Buyer Broker Responsibility
If a broker representing a buyer is not able to accompany their client to show the property, they should not give the buyer the lockbox access code to go into the home on their own, but rather make other arrangements and get permission to have one of their broker associates gain access for the buyers to attend with them or reschedule the showing when they can be present. In addition, the broker should explain any limitations placed on the buyer and buyer’s broker being able to access the property, which limitations should be detailed in section 12.2 of the Exclusive Right-to-Buy Listing Contract. The buyer’s broker is responsible to make sure that the accessed property is secure when both entering and after leaving the property.
There are also times that third parties may need legitimate access to the property, such as a home inspector, appraiser, contractor, or a broker’s assistant. In these instances, it is necessary that notice of any anticipated access be provided to and approved by the listing broker. This notice to the listing broker and receipt of approval should be contained in a writing or email so as to provide verification if a dispute should later arise.
All brokers are advised that before granting any lockbox access to the property, to take the time to verify the true identity of anyone requesting access, and to be on the lookout for any suspicious persons, companies or activities that may not appear to be legitimate. Remember, the failure to do so could result in possible disciplinary action and civil liability.
Brokers Should Review
CP-16 (Commission Position on Access to Properties Offered for Sale)
This Commission Position Statement addresses access to properties offered for sale, and it is the position of the Commission that the access information, and adherence to other instructions, whether through lockbox code or other means, is the responsibility of the listing broker.
Exclusive Right-To-Sell Listing Contract
The broker should also note that the Exclusive Right-To-Sell Listing Contract includes language in Section 23 (MAINTENANCE OF THE PROPERTY), which addresses the broker’s and brokerage firm’s liability for damage of any kind occurring to the property caused by their negligence or intentional conduct. Brokers are advised that any failure to safeguard the access information and adherence to the instructions of the seller related to access by others could result in a claim brought against them.
Exclusive Right-To-Sell Listing Contract
Rule 6.16 (Access Information for a Property)
In addition, Commission Rule 6.16 states that “A Broker who is not the owner’s Broker is prohibited from sharing access information to a property with any third party, such as an assistant, home inspector, contractor, or a Consumer without prior authorization from the owner’s Broker.”