The 3-19-13 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville

2. HOT LINE: Offer With an Escalation Clause?
3. HOT LINE ADVISORY: Another Scam Alert!
4. HOT LINE ADVISORY: A Worrisome Fair Housing Issue!


March 19: DEADLINE for Registrations for the TAR Spring Conference (March 25-26). There will be no onsite registrations! For more information or to register before the deadline, go to:

2. HOT LINE: Offer With an Escalation Clause?

QUESTION: Now that the market has heated up again, I have received multiple offers on a property I listed. One of these offers includes a clause stating that the prospective buyer will pay $XXX over any other offer I receive. How should I handle this and what should I advise my seller-client? I’ve heard these kinds of offers are common in other parts of the country, but this is the first one I’ve dealt with.

ANSWER: This is most often called an “escalation clause” …involving a fixed-price offer, but an additional statement that – if other offers are received – the buyer will exceed any other offers by a certain amount, often up to a “ceiling” price.

The type of offer to which you refer is difficult to handle appropriately. In order to accept an offer that is XX percent (or $xxx) over the highest bid, the purchaser will probably want proof as to what the highest price is (in a bona fide third-party offer) IF such a price plus percentage offer were accepted and the listing broker then informed the offeror what the actual price would be after the addition of the percentage. To REVEAL this information to the potential purchaser making the offer with the escalation clause could place the listing broker in a possibly illegal and unethical position.

This is due to various statutes, the National Association of REALTORS (“NAR”) Code of Ethics and an opinion from the NAR Membership Services department. First, the Tennessee Code Annotated (“T.C.A.”) 62-13-402(3) indicates that information received by any licensee involved in a transaction (including the licensee on the opposing side of the transaction) that might be considered confidential is to remain confidential. Since the price offered by a prospective purchaser could reasonably be deemed confidential as to third parties, it should remain confidential. Additionally, T.C.A. 62-13-402(4) states that a licensee has an obligation to treat all parties to the transaction with honesty and good faith. Therefore, it very well may be a violation of the cited statute for the listing broker to reveal to one potential purchaser what a different potential purchaser offered.

Even if the identity of the buyer making another offer is “shielded”, the very fact that one buyer’s offered price is revealed to a different prospective buyer, the latter statute above (62-13-402(4) COULD be interpreted to require that a listing broker then go back to ALL prospective buyers and reveal what other buyers were offering. A MUCH better and safer approach would be for a listing broker – who receives multiple offers, one of which has an escalation clause – to request that ALL buyers make their highest and best firm price offer or to counter the offer with the escalation clause at a firm dollar amount.

The TN Real Estate Commission has also, in the past, frowned upon escalation clauses.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]

3. HOT LINE ADVISORY: Another Scam Alert!


Tenn. Secretary of State Tre Hargett is warning buyers and sellers of homes in Tennessee about a possible scam involving real estate titles. Within the last couple of days, the Secretary of State’s Business Services Division has received copies of letters sent to at least eight real estate companies, suggesting that there are claims against titles of 28 residential properties.

The letters, postmarked from Portland, Ore., say the claims were submitted on behalf of an organization called “the French Trust.” They threaten legal action against anyone attempting to sell any of the listed properties.

The letters urges recipients to contact the French Trust. Although the Secretary of State’s office is referenced in the letter, Secretary Hargett advises that the office has no involvement in sending the letters and no involvement in enforcing legal restrictions against real estate transaction titles.

“It is not immediately clear what the motivations might be for sending out these letters, but we do know that the facts and representations made in them are not true,” Secretary Hargett said. “We want to get the message out to people who receive the letters because we don’t want the letters to unnecessarily complicate real estate transactions in our state.”

If you or one of your clients receives one of these letters, please contact the Secretary of State’s Business Services Division for assistance at (615) 741-2286 or via e-mail at:

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]

4. HOT LINE ADVISORY: A Worrisome Fair Housing Issue!

Over the past couple days there has been quite a bit said in social media and in real estate related media about an agent in Florida who was sued for a violation of the fair housing laws over the wording of a listing (NOT one of the agent’s listings!) displayed as a part of an IDX feed on the agent’s site.

The National Association has prepared a podcast discussing the issues raised by the case, including NAR’s understanding as to its current status, and possible preventive steps others can take to avoid similar situations in the future. This podcast is available on REALTOR.ORG (login required). In it, NAR General Counsel Laurie Janik addresses a subscriber’s potential liability under the Fair Housing Act for using Internet Data Exchange (IDX) content on his or her website:

[SOURCE: NAR’s Risk Management Committee]


Clarksville received some good news this past week! The TENNESSEAN reported that the Clarksville region is the second-fastest growing area of the country, citing data from the U.S. Census Bureau! The Clarksville Metropolitan Statistical Area – which also includes Christian and Trigg counties in Kentucky – grew by 3.7 percent from 2011 to 2012.

The Nashville Business Journal recently ranked Tennessee’s statewide professional/trade associations by number of members. Your Tennessee Association of Realtors is currently the SECOND LARGEST professional association in Tennessee, with approximately 19,000 members. [The Tennessee Education Association is the largest, with a membership of 46,000 teachers.]

The Memphis Area Association of REALTORS (MAAR) and Shelby County Trustee David Lenoir have partnered to present the Residential Real Estate Summit on Tuesday, April 2, at the Michael D. Rose Theatre on the campus of the University of Memphis. National Association of REALTORS Chief Economist Lawrence Yun will be the featured speaker. For more information, visit MAAR’s Web site at:

A recent CoStar Advisor newsletter describes major changes coming in commercial office trends: “Perhaps just as the inevitable disappearance of music, video and books stores should have been foreseen at the onset of a digitized connected world, so too should the commercial real estate industry start taking a hard look at changes occurring in the office market. Tenants are downsizing their offices, particularly larger public firms, as they increasingly adopt policies for sharing non-dedicated offices and implement technology to support their employees’ ability to work anywhere and anytime, according to Norm G. Miller, PhD, a professor at the University of San Diego, Burnham-Moores, Center for Real Estate, in a webinar he presented to CoStar subscribers last week.” To read more: CLICK HERE.

The Tennessee Housing Development Agency (THDA) built a website,, and has been inviting property owners to post Tennessee rental properties of all sizes, shapes, locations and costs on the site for each searching by households wanting to rent a home. There are now 100,000 properties listed in the database across Tennessee’s 95 counties. To learn more, CLICK HERE.

Remember the upcoming 2013 REALTOR Nationwide Open House, to be held on April 20 and 21. By participating in the largest-ever international open house campaign, you can bring value to home buyers and sellers around the world!


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