Commercial Listing? Don’t Misrepresent the Facts

ORLANDO, Fla.– Dear Shannon: I’m facing a rather astonishing situation and seeking guidance. A client of mine, a doctor, reached out for help finding a suitable location for a small medical practice in the neighborhood where she grew up. I began the search and emailed her several options, one of which was a two-story building listed in the MLS stating that this was not only a great location for an office downstairs, but also included a rental apartment upstairs.

This raised a red flag for my client. This building is in the area where she was raised, and she said she remembered there was a problem with the building department when the owners added a kitchen to the second floor so they could live above their business.

I said I’d look into it, called the building department and they confirmed that the zoning was “commercial,” which doesn’t legally allow a residential apartment upstairs. Frankly, I felt embarrassed and misled by an apparent misrepresentation of the property listing. So, I reached out to the listing broker for clarity, and, astonishingly, they said that was correct. According to the listing broker, it was “up to code” but without the necessary permits. Furthermore, the listing broker said the apartment had never been rented, and, in writing the listing info, just assumed the new owners could obtain a zoning change or variance from the building department.

Now I’m contemplating whether I should file an ethics complaint against this listing broker, charging him with a violation of Article 2 for publishing inaccurate information in the MLS. I value ethical conduct in my profession and want to ensure that I handle this situation appropriately. – Seeking Guidance

Dear Seeking Guidance: Thank you for reaching out. Your dedication to upholding ethical standards in your profession is commendable, and it’s important to navigate such situations with care and consideration. Let’s see what the Code of Ethics says about this situation, particularly Article 2.

Article 2 says, in part; “Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.”

In your situation, the MLS listing indicated that there was a “rental apartment upstairs.” This could mislead potential buyers into believing they could generate revenue from the apartment without the need for zoning changes or permits. However, when you called the building department, they confirmed that the property is zoned “commercial” and not permitted for a residential apartment. Even if the listing broker believed it likely that the new owners could have the zoning changed, the fact remains: At the time the listing was published in the MLS, the property was not so zoned. Arguably, being able to rent an upstairs apartment to a residential rental tenant is a pertinent fact about this commercial property.

Article 2 requires Realtors to avoid misrepresentation and provide accurate information, and advertising a rental apartment not legally permitted at that time seems misleading and potentially a violation of the code.

You’re considering filing an ethics complaint against the listing broker. Anyone can file an ethics complaint – it’s your decision. Ultimately, an ethics complaint is an opportunity to educate those found in violation or a vindication for those mistakenly accused of violating the code.

Before proceeding with a formal complaint, you might consider the following:

1. Communicate: You could continue engaging with the listing broker in a constructive manner. Express your concerns and request that he promptly correct the MLS listing to accurately reflect the property’s status.
2. Negotiate: If your client is still interested in the property, maybe help negotiate terms that serve the best interests of your client. This could involve discussions with the seller about the seller obtaining the necessary permits or making the required zoning changes.
3. Contact your local association: If you believe the listing broker’s actions violated the Code of Ethics or MLS rules, consult your local Realtor association or board for guidance on how to proceed. This may be an opportunity for an Ombudsman to get involved to avoid a formal complaint.

The Code of Ethics underscores the importance of practical and timely resolutions to ethical concerns, with formal complaints considered after other means of resolution have been explored. I encourage you to continue upholding ethical standards in your profession and I’m confident you will handle this situation appropriately.

Inspired by Commercial Code of Ethics Case Studies, Article 2, Case Study #2. Other laws and rules may apply.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Information deemed accurate on date of publication

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