It’s my mantra. I’ve uttered it hundreds of thousands of times, and mostly to Realtors®. It is never wrong, but it may not be as helpful an answer as can be given.
Whether an act is legal depends upon the specific setting, the facts and the reason one is asking. Let’s start with the reason one is asking.
Whether a salesperson is an independent contractor, for example, would depend upon the reason one asks. If I want to know whether the broker has to provide workers’ compensation coverage for the salesperson as the broker must do in the case of an employee, the answer is generally “no.” The answer is not based on whether the salesperson is truly an independent contractor, but based on Pennsylvania law that says a salesperson working for a broker and who is paid on the basis of productivity is exempt from the workers’ compensation provisions. If the reason for asking is to determine whether provisions of Pennsylvania’s Human Relations Act applies, the salesperson would be considered an employee. The same person, two different answers and all based on the reason for asking.
When asking whether certain conduct is legal, the accuracy of an answer depends upon the degree of specificity in the question. Again, let’s turn to an example. Do I as a listing agent have a duty to inform a buyer agent of an impending deadline? Neither the Real Estate Licensing nor Registration Act (“RELRA”) or the Rules & Regulations of the State Real Commission (“Rules & Regs”) lend any guidance. Pennsylvania common law (case law) suggests that in the absence of a fiduciary obligation to a specific person or entity, and absent any contractual obligation to do otherwise, the salesperson for one party has no duty to guide the other. This is especially so in the case where the other party is represented by a salesperson. But if you add that the seller requested the listing salesperson to notify the buyer agent, then the listing agent’s fiduciary obligation to her seller client dictates a different answer.
Real-life is far more complicated and nuanced than can be suggested by a simple question. For that reason, we dig down to determine all of the facts that are in existence. This phase of fact-finding in a lawsuit is referred to as “discovery” and it can last months or years.
Like snowflakes, no two events in life are identical. Cases of first impression abound. Thus we are left to analogizing and applying principles to new sets of facts with every question asked.
Whether an act is legal will also be determined by the duties imposed on that salesperson. Some duties are stated clearly in RELRA and the Rules & Regs and others not. When the duties are not stated clearly in legislation, we turn to cases, many of which deal with the concept of “negligence.” Negligence is deemed a departure from the standard of care owed by a person on a particular date in a particular set of circumstances. Whether a driver is negligent will depend upon all the facts and circumstances surrounding the accident. Negligence is found when the driver’s care was less than that owed by the reasonably prudent driver. A reasonably prudent driver slows when approaching a red light and maintains a safe distance behind the car ahead. The negligent driver whose eyes are on his cell phone rather than the car ahead is negligent, if not also reckless when slamming into a stopped vehicle.
A real estate salesperson is negligent when his conduct drops below the standard of care owed by a reasonably prudent salesperson in the same situation. How do we know what the standard of care is so that we can measure the conduct of a licensee when asking whether he or she was negligent? We do so by engaging experts who have special knowledge on the standard of care owed by real estate licensees in a given situation at a given time. Ultimately, an expert will opine, based upon a reasonable degree of knowledge in broker/agent practice, whether another’s conduct fell below the standard of care. If so, the agent was negligent and is liable for damages. Keep in mind that both sides will have experts and the jury (or judge if it is a bench trial) will be tasked with determining the applicable standard and applying it to the facts presented.
Reasonable people frequently disagree. It is the analysis that matters. If the answers were easy, I’d be out of a job! Every lawsuit has two sides which alone suggests that determining legality is not an easy exercise. The volume of published opinions in disputed lawsuits can no longer be housed in the largest of law libraries. Lawyers consult these opinions to assess similar and contrasting facts. There is no simple yes or no in most cases.
Whether a specific act is legal is not a question that should lead to a black eye or an exchange of vitriol. More suitable is a respectful discussion in the surround of overstuffed chairs, several glasses and a bottle of single malt!
Happy New Year to all!
Copyright © James L. Goldsmith, Esquire, 2020
All Rights Reserved