Syndication Success: A Look at the Legal Considerations of Effective Listing Data Licensing

To syndicate, or not to syndicate? That is the question that MLSs, brokers, and agents have been asking themselves for quite some time, and the debate still rages for a wide variety of reasons. But we’re not going to dive into that here. This article is about how to get the most out of listing syndication agreements for those who choose to pursue them.

Whether it is an MLS, broker, or agent agreeing to syndicate listings, it is imperative for data providers to read the contractual fine print of any syndication agreement and to ask questions. To assist members, NAR created a “Checklist of Issues to Address in a Syndication Agreement” that is available on nar.realtor. Although not exhaustive, the checklist provides a good foundation for understanding the terms of any syndication agreement.

For the purpose of this article (as well as the checklist), the MLS, broker or agent providing the listing data is called the “provider”; the company receiving the data directly from the provider is called the “syndicator”; and the third party that receives the data from the syndicator is called the “publisher.”

What is a listing?

The first issue to address in a syndication agreement is the data being licensed. Make sure the definition of what is being licensed is clearly and narrowly defined. This definition may describe the type of information included, such as active listings, and may exclude other information, such as sold data. If the provider permits the display of active listings only, be sure the agreement describes how the syndicator and the publishers will delete or destroy the listings after the properties have sold.

Where can a listing go?

Next, clarify what the syndicator is allowed to do with the data. Some syndication agreements include very broad licensing terms, such as “perpetual,” “irrevocable,” “royalty-free,” and “for any purpose whatsoever.” Therefore, it is essential that the provider understands what each of the terms means and ensures that the contract properly articulates any restrictions the provider wants to impose against the syndicator or publishers regarding use of the listings now, and in the future.

A syndicator’s main function is to distribute the listings to a number of publisher Web sites. But a provider may control which sites the syndicator can send the listings to and how those publishers may use the listing data by adding requirements to its syndication agreements, such as:

• Requiring the syndicator to obtain the provider’s prior permission for distribution to any publisher
• Requiring a written agreement between the syndicator and the publisher that is reviewed and approved by the provider
• Prohibiting publishers from re-syndicating the data; or prohibiting use of the licensed data to sell referrals or to create reports, valuations, or other derivative works
• Describing the mechanisms the syndicator must use to ensure compliance by each of the publishers
• Describing the mechanisms for keeping listing data accurate and for removing listings from the syndicator’s or publisher’s sites at the provider’s request
• Holding the syndicator liable for publishers’ acts

Also, consider requiring the terms of the syndicator’s agreement with publishers to be consistent with the terms of the provider’s agreement with the syndicator. This will ensure that the publisher will not have greater rights to use the MLS data than the syndicator.

How can a listing be displayed?

How the listing data is displayed on syndicators’ and publishers’ Web sites is a hot-button issue that is important from a business perspective because it helps the provider determine the effectiveness of a particular advertising outlet. This is also important from a legal perspective, as it relates to the requirements of some state licensing laws regarding advertising. Some states require licensees to remove an expired ad for a listed property within a reasonable time. Providers should ensure that the syndicators and publishers will assist them in complying with such laws.

A provider may want to ask the following questions regarding display of MLS listings:

1. Must the syndicator and publisher display the source of the licensed content in proximity to the listing?
2. Where will the listing broker’s name appear in relationship to the listing? Will the broker’s contact information also be displayed?
3. Will competing brokers be allowed to advertise in connection with the listed property? If so, will their information appear more prominently than the listing broker’s?
4. How will the syndicator and publisher ensure that the listing information is kept current and accurate? What happens if a publisher fails to do so? May the data feed be terminated in such cases?
5. What is the process for removing expired or sold listings?
6. If a syndicator receives duplicate listing information—for example, a feed from an MLS and a broker regarding the same property—how will the syndicator process such duplicate listings? Which one takes priority?

Following the contract

Contract compliance is another major issue to address in a syndication agreement. How will the syndicator ensure compliance with the terms of the syndication agreement that you’ve so carefully reviewed and negotiated? Also, how will the syndicator ensure compliance by the publishers receiving a feed from the syndicator?

One way of accomplishing compliance is to provide the provider a right to audit the syndicator’s systems periodically. If an audit is too expensive a proposition for the MLS or broker an alternative would be to require the syndicator to provide periodic reports or certifications detailing all of the activity related to MLS listings such as:

• Which listings have been received
• Which were rejected or accepted (in the case of duplicates)
• Analytic data on traffic to the listings

When discussing audits and compliance with the syndicator, be sure to address the possibility—and consequences—of the syndicator’s failure to comply. For example, describe the circumstances under which the provider can suspend or discontinue delivery of the listing data.

In addition to the issues highlighted here, the “Checklist of -Issues to Address in a Syndication Agreement” also addresses many general contract terms analyzed from the unique perspective of syndication, including:

• retaining rights to and ownership in intellectual property
• security of licensed content
• warranties and representations
• indemnification
• amendments
• term and termination

Whether an MLS, broker, or agent is agreeing to syndicate property listings, it is always a good idea to read the fine print and ask questions. NAR’s checklist should provide a good starting point for that discussion.

Q. What’s an MLS’s legal liability when a syndicator or a publisher lists properties with missing or wrong information? If the brokers are going through the MLS for their syndication choices, does the MLS have liability if the information is not published according to state license law, or if a consumer has a complaint?

A. The answer depends on a number of factors. First, what is the MLS’s agreement with the listing broker? If the broker has given permission to the MLS to syndicate or has requested that the MLS perform the syndication (opted-in, etc.), the terms of that agreement would determine whether there would be liability to the broker. For example, if the MLS didn’t make any representations or warranties to the broker regarding accuracy of listing displays, then it’s unlikely it could be subject to liability. The same analysis would be true for a consumer’s complaint against the MLS. If no assurances were made to the consumer about the listing online, then there’s unlikely to be liability.

Q. Can an MLS sue a syndicator or publisher that violates the contract and won’t fix improperly displayed listings?

A. The difficulty with any lawsuit (whether brought by a broker or a consumer against an MLS or brought by a broker or an MLS against a publisher) is proving damages. How is a party actually damaged by the publisher’s failure to update or remove a listing? It’s not impossible to prove damages, but it may be difficult. One scenario may be if a state regulator fines a broker for failure to comply with state advertising regulations. The broker could show that, due to the fine imposed, he was actually damaged by the syndicator’s or publisher’s failure to comply with the contract with the broker. With regards to broker liability against a consumer complaint, some associations and MLSs have added language to their exclusive listing agreements to try to avoid such liability. For example, the listing agreements provided for use by members of the Northeast Florida MLS provides that: “Seller understands and agrees that public Web sites determine their own content and use of data, and therefore NEFMLS, NEFAR, and Broker have no control over public Web sites and no obligation to remove any of the above content from public Web sites at any time.”

Q. What can an AE or MLS executive do if the current syndication situation is out of control and, for example, members are finding their listings on hundreds of publishers’ sites, often not in compliance with MLS rules or state licensing requirements?

A. If you find listing data on Web sites where it is not authorized to be or it’s unknown just how the data got there, you should contact the problem sites promptly and individually. Unfortunately, many of these third-party publishers do not readily supply contact information because they do not want to field complaints. However, if you can, send a letter demanding that the site not only stop displaying your listing data without authorization but also tell you exactly how it acquired the listing information. Cease and desist letters are not difficult to draft and may prove effective. If a Web site is unwilling to tell you how or where it acquired your listing information, it’s possible that it’s displaying the data without authorization. If so, it could be held liable.
The terms of any syndication contract are going to control the options an AE has to rectify any problems. The syndication contract may contain provisions allowing the MLS to discontinue the listing data feed under certain circumstances, such as breach of the agreement. Also, it’s wise to reach out to vendors with whom you are unhappy to ask questions and try to renegotiate. It can’t hurt to ask and it’s possible you may see results. At the very least, you will put the vendor on notice of your dissatisfaction with their service and therefore your unlikelihood of renewing the agreement when the time comes.