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Real Estate Listing Agreements are Contracts – Do you know your rights and obligations?

No sooner had we posted our blog article on the enforceability of listing agreements even when they are not in writing, another recent case came to our attention. This case is from the New Kent County Circuit Court. This case is another example of the increasing acrimony between sellers and brokers in a tight real estate market.

House For Sale

Listing Agreements

 

In Ware Creek Real Estate v. J & R Enterprises, J&R Enterprises was the listing agent. Quoting from the judge’s opinion letter, J&R Enterprises “alleged [that] it entered into an ‘Exclusive Authorization to Sell’ (the ‘Exclusive Authorization’) with the [Ware Creek Real Estate] on October 16, 2007; that on June 2, 2008, [Ware Creek Real Estate] and Jack Ass Flats executed a contract under which [Ware Creek Real Estate] sold the property for $300,000, with settlement to occur at a later date; that [Ware Creek Real Estate] acknowledged in the contract that [J & R Real Estate] was the procuring cause of the sale; that settlement occurred on August 17, 2009, when [Ware Creek Real Estate] delivered a deed and received $300,000. [Ware Creek Real Estate] demurred on the ground that the sale occurred after the termination of the Exclusive Authorization.”

The listing agreement expired on May 1, 2008 and the contract was signed within 90-days following the listing agreement’s expiration. Ware Creek Real Estate argued in its demurrer that the listing agreement required payment of the commission only if the property is sold by J & R Enterprises within the period of time of the listing agreement.

The judge looked at the four corners of the listing agreement to determine the contract’s definition of “sold.” As the judge pointed out, just a couple sentences later, the listing agreement provided that Ware Creek Real Estate owes the broker a commission “if, for example, the owner receives an offer during the initial period of time but accepts it thereafter. If this occurs ‘the Owner shall pay Broker the Fee as if the Property had been sold during the initial period of time …’ Settlement is not required for the broker’ to earn the commission. If acceptance of an offer is sufficient to earn the broker his fee in this circumstance it is unlikely the parties intended ‘sold’ to have a different meaning in the first two sentences of the same paragraph.” The Court overruled the demurrer and the case will continue to trial or other resolution.

Virginia judges will rely upon the listing agreement or other contract to determine the rights of the parties. You save money by having an experienced real estate attorney review your documents before you execute them.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

 

 

 

 

 

 

John Tarley

John Tarley

 

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John Tarley

John is the firm's managing partner and chairs the firm's small business, zoning, and litigation practice areas.

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Filed under: Business Planning, General Interest, John Tarley, Real Estate Litigation, Real Estate Strategies by John Tarley

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