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BRIEF BYTES: Question and Answer
Forum
The purpose is to answer frequently
asked or unusual questions. Topics will range from real estate,
business, litigation and trusts and estates. Your feedback
is appreciated. Direct your comments to Cherisse Roy at croy@scott-harris.com
UNWILLING
SELLER OBLIGATED TO PAY COMMISSION
 Early
this year, the Third District Court of Appeals ruled in East
Kendall Investments, Inc. v. Bankers Real Estate Partners
that a listing agent was entitled to a commission when a ready,
willing and able buyer was found but the seller was unwilling
to sell. The broker entered into an exclusive listing agreement
with the seller to sell an apartment complex for $3,950,000.00
at certain terms. The terms of the listing agreement provided
that a commission would be paid to the broker if the broker,
the seller, or any other party found a buyer "ready,
willing and able to purchase the property at the terms and
for the price specified." The listing agreement was to
expire on August 10, 1996
On
August 9, 1996, another broker presented to the listing broker
a letter of intent from a buyer containing a purchase price
of $3,400,000.00. On August 13, 1996, the buyer increased
his offer to the listing price ($3,950,000.00). On August
16, 1996, the seller presented a counter-offer of $3,995,000.00
($45,000.00 over the listing price). The buyer agreed to purchase
the property at the seller's price and a new letter of intent
reflecting the increased price was prepared. However, the
seller refused to sell to the buyer even at the increased
purchase price. The listing broker demanded payment of a commission,
the seller refused to pay the commission, and litigation followed.
The
Court of Appeals ruled in favor of the listing broker. In
so doing, several important points of law were established.
First, the Court determined that even though a full price
offer was not presented prior to the expiration of the listing,
the continuous negotiations which extended beyond the expiration
of the listing agreement culminated in a full price offer.
Therefore, the Court ruled that even though the full price
offer was not received during the term of the listing agreement,
the broker performed when the full price offer was finally
generated as a result of continuous negotiations which began
prior to the expiration of the listing agreement.
Second,
the Court ruled that in the circumstances presented by this
case, a presentation of a non-binding letter of intent is
sufficient to meet the terms of producing a buyer ready, willing
and able to buy. The Court so ruled because the listing agreement
does not purport to set forth all of the seller's terms for
sale. Therefore, there are many terms which are to be negotiated
between the buyer and the seller other than the purchase price.
The Court found that the failure to execute a contract for
sale and purchase was the fault of the seller. The Court cited
cases which hold that "regardless of whether the employment
contract requires the finding of a purchaser or a sale, the
broker is entitled to a commission if the seller is responsible
for the failure to consummate the sale." The Court found
that the seller's conduct in this matter was arbitrary or
unreasonable and, therefore, the seller was responsible for
the commission.
This
case is a helpful case in enabling a broker to claim compensation
in situations where the seller, who listed the property at
a specific purchase price, becomes unreasonable, arbitrary
or capricious in dealing with a buyer who is willing to pay
the asking price.
To Contact Us, call (561)
624-3900. Or fax
(561) 624-3533. To correspond online, please fill
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