Explanations

Taking a net listing is generally legal in California, provided the broker adheres to strict disclosure requirements. The law mandates that the broker fully disclose in writing the selling price, the seller’s expected net price, and the broker’s compensation amount before accepting any offer. As long as these disclosures are made and consent is obtained, a net listing itself is not a violation.

The other options represent clear violations of real estate law:

D. Taking an option on a property and collecting a commission on that option (without proper disclosure and consent) is a violation. While “listing with an option” is legal in California, an agent must make full disclosure of all material facts to the seller, including any potential profit the agent stands to make by exercising the option and selling the property to a third party, and must obtain the seller’s written approval before exercising the option. Failing to do so, especially by making a “secret profit,” is a serious breach of fiduciary duty and a violation.

B. Failure to put a definite termination date in an exclusive listing is a violation. Exclusive listing agreements, such as “Exclusive Authorization and Right to Sell” or “Exclusive Agency,” must include a specific termination date to be valid and to avoid disciplinary action from the Department of Real Estate (DRE).

C. Failure to give a copy of the contract to the person who signed it at the time they sign is a violation. Brokers are legally required to provide copies of all signed documents to the parties who signed them immediately upon signing.

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