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Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

RLS’ Universal Co-Brokerage Agreement (“UCBA”) – Revisions Effective January 1, 2024

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UCBA stands for RLS’ Universal Co-Brokerage Agreement. To increase transparency and ensure that the residential marketplace is fair to consumers, the UCBA has made it mandatory for offers of compensation to the buy-side broker toRLS’ Universal Co-Brokerage Agreement (“UCBA”) come directly from the Seller or Owner. Listing Brokers can’t offer compensation to the buy-side broker, even if it is on behalf of the Seller or Owner. Furthermore, Listing Brokers will no longer be responsible for the buy-side compensation.

The UCBA has revised Article IV to clarify the seller’s compensation offer to the buy-side broker. New sample listing agreement compensation clauses are also in exhibits H and I.

What is RLS at REBNY?

The REBNY Residential Listing Service (RLS) system enables REBNY’s Residential Brokerage Division (RBD) member firms to share exclusive listings.The RLS powers the listings displayed on public-facing websites of New York City’s brokerages and third-party websites. In other words, it provides the listing inventory on your brokerage’s internal listing interface.

Accepting Professional/Retail Space in a Residential Property

Responding to broker feedback, the RLS will now accept listings for professional and retail units within residential properties. Listings of such units in five-team or fewer residential properties must comply with the “Simultaneity Rule” of the UCBA’s Article I, Section 5.

The RLS will add new data fields to define residential properties and specify these units further. The fields are Mixed-Use, Retail, Professional, and Office.

Loosening Restrictions on “Opted-Out” Listings

In real estate, there are Opt-Out listings that the Owner chooses not to submit to the RLS. The listing broker must fill out an Opt-Out form for the RLS.

The listing brokers can now share the Opt-Out listings with other brokers through personal one-to-one emails or phone calls.

Unsolicited offers during “Coming Soon” status

The UCBA is clarified to ensure unsolicited offers may be conveyed to the Owner while an Exclusive Listing is under “Coming Soon” status.

However, listings must be in “Active” status to further engage with the party marking the offer.

Electronic Payment for Commission Checks and Rent Deposit Checks

The updated UCBA allows electronic fund transfers such as wire transfers, ACH payments, and digital wallet apps like Venmo and Zelle for rent, security deposits, and other payments.

Participants can use their firm’s dedicated escrow or consumer funds account to hold the payment.

How is the RLS changing compensation offers?

Starting from January 1, 2024, owners and sellers of exclusive properties must directly offer compensation to the broker representing the buyer. Listing brokers cannot make these offers on behalf of owners or sellers. Additionally, listing brokers will no longer be responsible for paying buy-side compensation.

The seller or Owner needs to provide a written offer of compensation to the buyer’s broker, which the buyer’s broker may accept, reject, or negotiate.

The Universal Co-Brokerage Agreement (UCBA) version of January 2024 has new sample listing agreement compensation clauses that make it easier for the seller or Owner to convey their offer of compensation to the buyer’s broker.

Does this mean I need to amend my listing agreements extending past January 1, 2024?

If you have current listing agreements that are valid beyond January 1, 2024, you will not need to amend them to convey the seller’s or Owner’s offer of compensation to the buy-side broker. These agreements will run their course as usual.

However, suppose you need to extend or renew these agreements after January 1, 2024, when the new rules take effect. In that case, you should ensure that the seller’s or Owner’s offer of compensation is conveyed to the buy-side broker.

How does this change affect how I enter my exclusives onto the RLS?

The RLS will still be the forum where the buy-side compensation is displayed, and you can enter it. However, you must ensure that the compensation’s buy-side offer originates from your seller (or Owner), not from you, your fi, rm, or any other broker.

So, how will the buyers’ brokers be compensated?

Assuming the seller offers compensation and the buyer’s broker accepts it, the seller or the exclusive property owner will directly compensate the buyer’s broker. This compensation should occur at the closing per the usual practice in the New York City area.

However, if the seller does not offer compensation to the buyer’s broker, the latter can negotiate their possible compensation from the buyer.

Can a buyer’s broker reject the seller’s offer of compensation?

Yes, a buyer’s broker may reject the seller’s offer of compensation and negotiate with the seller, through the seller’s listing broker, over the terms of compensation.

The buyer’s broker may also seek to reject the compensation offer from the seller outright. The buyer’s broker negotiates their potential compensation from the buyer.

Universal Co-Brokerage Agreement: When is this change effective?

This change will be part of the latest edition of the UCBA, which takes effect on January 1, 2024.

Why is this change happening now?

The RLS strives to promote transparency and consumer confidence in the residential marketplace. These changes comport with Citysnap’s, the RLS’s consumer portal, and prominent display of buy-side compensation for each listing.

The RLS also believes that “decoupling” the buy-side compensation represents the future of residential real estate trading and expects other listing services to follow suit.

Are there any other changes in the Universal Co-Brokerage Agreement?

Yes, the January 2024 version of the UCBA:

  • Allows professional and retail units within residential properties listed on the RLS,
  • permits limited dissemination of “opted-out” exclusive properties,
  • Clarifies offers of “Coming Soon” properties.
  • Accounts for how electronic deposit payments.

What are the consequences if brokers and sales agents do not follow these UCBA changes?

Participants who violate UCBA rules will face financial penalties.

Are there any other policy changes?

Effective immediately, Realtor Listing Service (RLS) participants cannot utilize any listing management technology that facilitates searching for property listings based on compensation level.

This new regulation aims to assist agents in fulfilling their fiduciary responsibilities to clients by ensuring they are presented with properties that match their criteria rather than those offering higher compensation rates.

How does this affect compensation under the Universal Co-Brokerage Agreement?

Starting in January 2024, the UCBA updated its compensation section. It clarified that the seller or owner should compensate the buy-side broker. Some brokers and agents have misunderstood the UCBA to provide a standard 50/50 split for all commissions in the RLS, which is not the case.

The previous versions of UCBA only provided a 50/50 split in rare situations where there was no written agreement on what the selling agent gets and what is offered to the buyer’s agent. However, the January 2024 version of UCBA removed this fail-safe provision to ensure the seller compensates the buy-side broker.

Written By: Georges Benoliel

Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.

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