Legal Blog - Lockboxes


Why do we require CBS Codes?

Sep 30, 2016


Why do we require CBS Codes?

Affiliate members play a vital role in facilitating real estate transactions. The inspectors, contractors, appraisers and other professionals who have joined NVAR as Affiliate members provide a wide range of services that are necessary for the successful closing of a real estate transaction. The nature of their work requires some of these Affiliate members to obtain access to a specific property. Homeowners and REALTORS® are not always available to allow the Affiliate member into their house at a time that would be convenient. In the past this would lead to delays and missed appointments that would add unnecessarily delays for everyone. Recognizing the needs of our Affiliate members, we worked to develop a process that would allow them access to these properties through our lockbox system. Our lockbox policies were revised to allow Affiliate members to have limited access to the property.

The Perspective of Homeowners
One important hurdle to overcome was the homeowners' permission. A homeowner decides if and when a lockbox may be placed on a property. While REALTORS® often advise their clients on this issue, homeowners make the final decision in this matter and are not required to follow their REALTORS®' advice. The inspections, appraisal, remediation and other work performed by the Affiliate member may be required under the sales contract but the homeowner may determine how such access will be provided. It is important to remember that without the homeowners' consent, a lockbox may not be placed on a property.

Therefore, the primary focus of our lockbox access policies has always been to provide the level of access that homeowners are most comfortable with allowing. We must ensure that homeowners have trust and confidence in the lockbox system if we want these homeowners to authorize the use of a lockbox on their property. Without this acceptance, lockboxes would remain in storage and we would revert to waiting on the availability of the homeowner to access the property.

It's no secret that the primary reason homeowners agree to use the lockbox system is to provide greater marketing exposure for their property. During the marketing phase of the sale, these homeowners are willing to accept an increased access to their property in exchange for the increased potential of a faster sale at a better price. The average homeowner wants the widest possible exposure to potential buyers when marketing a property. Therefore, REALTOR® members have been provided with full access keys that allow them greater access to accomplish this for the seller.

However, in regard to inspections, repairs, appraisals and the other work necessary to complete a real estate transaction, homeowners are more reluctant to allow access to their property. While a large number of agents and buyers may need to see the house before a buyer will be found, there is rarely a need for more than a few affiliate members to access a specific property. Unlike the marketing phase of a transaction, after a contract is ratified there is normally only one home inspector, exterminator and so forth who is needed to complete each subsequent step in the transaction. It is rare for more than one inspection, appraisal or other real estate service to be ordered for a typical real estate transaction. Therefore, access to the lockbox system for these types of activities is limited to lockbox keys that can verify that the specific Affiliate member has authorization to access the property.

Using CBS Codes
The limited-access keys that are used by Affiliate members require a special code ("Call Before Showing," or CBS, code) to open each lockbox. The listing agent who owns the lockbox that is placed on the property can provide the lockbox code to the Affiliate members. This system allows the listing agent to verify that only the appropriate service providers are given access to the property. This limitation on access is a safeguard that has been built into the system because Affiliate members only need to access specific properties rather than all properties in our market area. Without the necessary code for that specific lockbox, a service provider would be unable to obtain access to the property.

Homeowners have indicated a preference for this type of restriction on Affiliate members. While homeowners prefer the greatest possible access to a property during the marketing phase of the transaction, after a contract is ratified the majority of homeowners become reluctant to continue providing unrestricted access to their property. In some cases, homeowners have specially requested that the lockbox be removed after the contract is signed. Our limits on Affiliate access to the lockbox system have helped reassure homeowners that the lockbox should continue to be used by Affiliate members because the access will be controlled by the agent representing the homeowner.

Lockbox Rules and Regulations
Affiliate members who wish to have access to the lockbox system are required to abide by the NVAR Rules and Regulations for Lockboxes. These are the guidelines that have been established by NVAR to regulate the use of the lockbox system. Specific security provisions have been adopted to protect the homeowners and ensure a safe system for everyone's use.

These rules include, but are not limited to, the following provisions:

Card holders (REALTORS® and Affiliates) are required to keep the key in their possession or in a safe location at all times.
Card holders may not attach the personal identification number (PIN) to the key, disclose their PIN to another person or lend the card to anyone for any reason.
Card holders may not allow anyone who has been admitted to the property by their use of the card to remain in the property when the card holder leaves except with the consent of the property owner.

NVAR is aware that some individuals have attempted to circumvent the Affiliate lockbox access policies by obtaining a real estate license and joining NVAR as a REALTOR® member. Unfortunately, this practice also violates our rules for REALTORо member access to the lockbox system. REALTOR® members are limited to accessing a property only in connection with his or her normal and customary activities while acting as a real estate agent. REALTORS® who are not acting in the capacity of a real estate agent are not permitted to access a property through the lockbox. REALTORS® who use their card for the purpose of providing a different service outside the scope of their customary activities as a real estate licensee may be sanctioned and lose access to the lockbox system.

Risks of the Lockbox System
The vast majority of our Affiliates and REALTOR® members are responsible professionals who respect the homeowner's property. However, there is always a risk of abuse by a lone, disreputable individual. When such abuse has occurred in other parts of the country, lawsuits and the negative publicity that accompanies such suits have often resulted in a loss of confidence in the lockbox system. It can take years to regain the widespread acceptance of homeowners in the lockbox system once their trust has been lost or damaged.

Real estate firms, brokers, agents and local REALTOR® associations have been held liable in those cases in which they failed to provide sufficient measures to protect the homeowners from harm. Our legal counsel has advised NVAR that in order to protect homeowners, members and the association, we must protect the integrity of the lockbox system and the properties of homeowners. A critical factor in our defense would be our ability to show that we took every reasonable precaution to limit access to the system. Therefore, we believe that the extra precautions that require Affiliate members to use a CBS code are an inconvenient but necessary part of our responsibilities for providing lockbox services.
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