CRMLS Revises Its Rules and Regulations

Dale Farnum
By Dale Farnum
OCR MULTIPLE LISTING DIRECTOR

Among other things, the revisions clarify the meaning of the acronym DOM, describe how a New Construction Listing should be handled, and define more specifically the term “media” as it is used in a Multiple Listing Service (MLS) compilation.

In mid-May, the California Regional Multiple Listing Service (CRMLS) revised its Rules and Regulations. Two areas of concern that these changes were intended to address are new construction and copyright infringement, especially regarding the use of listing photographs.

New Construction. A Multiple Listing Service (MLS) is defined in California Civil Code Section 1086 as a “cooperative platform for offering and receiving compensation.” A listing involves not only sharing information but also making a contractual offer; however, some real estate agents working with new construction listings have gotten into a bait-and-switch situation where, after they did the work required to sell the homes, the compensation they received was not what they had expected.

Copyright Infringement. To protect intellectual property, the law is specific about the circumstances in which one person may use another person’s work. In most instances, the person using the work must secure permission from the person who created the work and, therefore, holds the copyright, and may be required to compensate the creator in some way for its use.

Being addressed in this instance is the circumstance in which one agent secures a listing, creates marketing materials (e.g., descriptive text and photographs) for the property, and has the listing agreement expire before the property is sold. If the property is subsequently listed with another agent, that second agent might be tempted to use some of the marketing materials that were developed by the original listing agent without securing permission to do so.

In cautioning against this practice, CRMLS says that statute violations carry a potential fine of $35,000 in court per infringement.

The Rules and Regulations revisions, which pertain to Sections 7.9, 7.18, 11.5, 12.10, and 14.4, became effective on May 15 and are summarized below.

Section 7.9.1: Impact on Days on Market (DOM) As it Pertains to the Exclusion Form
The acronym DOM stands for Days on Market, not Days on the Multiple Listing Service (MLS). The DOM calculated in the MLS and reported to the various internet sites will be from when marketing begins. As a general rule, the first Day on Market will be the beginning date of the Listing Agreement, which is either the beginning date identified on the agreement or the date of the last signature required to make the listing agreement valid, whichever is later. Alternatively, the DOM may begin on a later date as long as no marketing of the property occurs and the CRMLS Exclusion Form is used.

For the purposes of this section, the term marketing is defined as any communication made to the public containing any information, details, price, or terms of any potential sale of the property, or any communication made to the public in regard to the brokerage firm or agent’s representation of the seller. Marketing includes, but is not limited to, (1) a sign on the property, (2) internet website posts, (3) social media posts, (4) flyers or advertising, or (5) open houses.

Section 7.18.4: New Construction Listing
Any residential property listed in the MLS that requires the disclosure of a Final Public Report pursuant to the Subdivided Lands Law before a sale of the property shall be designated a New Construction Listing (NCL). All MLS rules shall apply to a NCL except as modified as follows:

  1. Submitting a NCL shall cause to be exempted from Mandatory Submission Rule 7.8 each individual lot within the subdivision covered by the same Final Public Report as the NCL.
  2. The NCL listing broker agrees that the offer of compensation for the NCL filed with the MLS shall be the same offer of compensation pursuant to Rule 7.15 for all properties requiring disclosure of the same Final Public Report as the NCL property.
  3. Any agreement to modify the amount of the offered compensation published in the MLS as of the date the offer from a buyer is made shall be voidable at the option of the buyer’s agent.
  4. Upon final closing of any property subject to the same Final Public Report as the NCL, the listing broker shall report or input in the MLS as “sold” and report the selling price within two business days of the final closing date.

Section 11.5: Media on the MLS

  1. The term media is defined as any depiction or expression of works including, but not limited to, photographs, images, drawings, renderings, audio, video, and virtual tours.
  2. By submitting any media to the MLS, the participant and subscriber represents and warrants that he or she owns the right to reproduce and display the media or has procured such rights and all necessary licenses from appropriate parties.
  3. The submitting participant and subscriber grants CRMLS an irrevocable, unrestricted, transferable, perpetual, royaltyfree, nonexclusive license (with right to sublicense) to use, store, reproduce, compile, display, and distribute the media as part of its compilation.
  4. Use of media by any subsequent participant and subscriber requires prior written authorization from the submitting participant and subscriber or other appropriate party with the legal right to grant such authorization.
  5. Branding of any media submitted to the MLS is prohibited.
  6. Media submitted to the MLS shall be a truthful representation of what is listed for sale as part of the listing transaction.

Section 11.5.1: Mandatory Submission of Photograph or Rendering

  1. At least one photograph or rendering accurately depicting a substantial portion of the exterior of the subject property must be submitted to the MLS within five days of entry of listing.
  2. Exemptions i. Land/Lot and Business Opportunity entries are exempt from the provisions of Section 11.5.1. ii. If applicable, a seller’s written instruction to the listing broker expressly directing that photographs/ renderings of the subject property not appear in the MLS compilation must be provided to either the MLS or the Association of REALTORS® (AOR) within five days of listing entry.
  3. The MLS or the AOR reserves the right, after notice has been given to the participant and subscriber, to remove any listing from the database for failing to comply with this section.

Section 11.5.2: Removal of Media

  1. The MLS or the AOR reserves the right, without notice, to remove any media that does not comply with the MLS Rules and Regulations.

Section 12.10.2: False or Misleading Advertising and Representations; True Picture Standard of Conduct

MLS participants and subscribers may not manipulate (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result or otherwise misleads consumers

Section 14.4: Duty to Correct and Cooperate

  1. Within two days of receiving a citation, a participant and subscriber must correct any violation of the Rules and Regulations and bring the listing into compliance.
  2. Failure to correct violations or to cooperate with an investigation under the Rules and Regulations within the two-business-day correction period may subject a nonconforming listing to removal

To view the revised MLS Rules and Regulations and the Citation Policy in their entirety or to download copies for reference, go to www.ocar.org/mlspolicies.