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Should brokers get exclusive agency contracts signed by buyers?

Apr 1st, 2015 | By | Category: Real Estate Litigation

Attorney Steve’s Commission College – Buyer / Broker representation contracts

Lock your buyers into pay your real  estate xcommissions


Here is something I hear all too frequently.  I showed this buyer around for months, and finally found a place they wanted.  When it came time to write an offer, the buyer’s disappeared.  I called them and emailed them and was informed they had a change of plans and were thinking about it.  When I later looked the property up on the MLS I see that the property was sold.  Did the seller’s agent double end the deal (basically interfere with your business relationship), or did the buyer figure they could work a better deal on their own (maybe getting a lower price of the seller doesn’t have to pay a buyer’s broker commission.  As the buyer’s agent you are upset and wonder if you have any legal rights.  Sound familiar?  Read on.

General legal advice

If you realize you have a “real buyer” (not just someone killing time dreaming about the million dollar home they plan to have one day) and you have a strong feeling that your relationship is good, and that you will be putting out a large amount of time, gas, money, etc, showing properties to your prospective buyer, DONT BE SHY, PULL OUT THE EXCLUSIVE BUYERS AGENCY LISTING AGREEMENT AND GET THEM TO SIGN ON THE LINE THAT IS DOTTED (TO QUOTE GLENGARY GLENN ROSS).

Attorney Steve Tip:  Make sure YOU as the broker or agent, are also signing and returning a copy back to the buyer (it takes two to contract and get those contracts in writing to protect both parties.

That way, when the deal goes down and you were cut out of the sales commission pie, you can show up with your contract in hand, and your evidence of procuring cause and you can basically say: “WHERE’S MY COMMISSION DUDE…I am owed a commission in the amount of $40,000 and now I want it.  If not, we will go to binding arbitration or litigate the case in state court.”

The party who had the contact but got screwed by the buyer, may have a claim for that full commission as a matter of contract law.  In these circumstances you will be glad you went to the moderate trouble to get the contract signed.

From there, if they won’t work it out amicably, call Attorney Steve and we can kick some litigation magic up in the air and goofily suit to defend your right to a commission.

You can always draft your own amendment making any breach of the agreement a case where both parties will submit the case to a binding arbitration. Our can service as an arbitrator, mediator, or we can go straight to litigation court.

For an example of one Arizona case that denied a real estate commission because the broker failed to sign the exclusive buyers contract (even though the buyer did) there is the case of Young v. Rose, 230 Ariz. 433, 435-36, 286 P.3d 518, 520-21 (Ct. App. 2012) which held:

“A real estate employment agreement is “a written agreement by which a real estate broker is entitled to compensation for services rendered pursuant to A.R.S. §44–101(7) A.R.S. § 32–2151.02(E). Arizona places “strict requirements” on real estate professionals who seek to recover commissions. Olson v. Neale, 116 Ariz. 522, 524, 570 P.2d 209, 211 (App.1977). “The legislature has enacted comprehensive legislation to regulate the … conduct of real estate salesmen and brokers…. to protect the public and render judicial relief unavailable for the recovery of a commission which would be in violation of the law.Realty Execs. v. Northrup, King & Co., 24 Ariz.App. 400, 402, 539 P.2d 514, 516 (1975) (emphasis added) (citing Bonasera v. Roffe, 8 Ariz.App. 1, 442 P.2d 165 (1968)).”
The Young court continued:
“In Red Carpet–Barry & Associates v. Apex Associates, a real estate broker sued to recover a commission allegedly owed by sellers with whom he had a contract. 130 Ariz. 302, 303, 635 P.2d 1224, 1225 (App.1981). The sellers moved to dismiss, arguing the written agreement was unenforceable because it lacked an expiration date. Id. The superior court agreed and dismissed the complaint. Id. On appeal, this Court affirmed. Id. We relied on then-existing rules of the real estate department, which we noted “have the force and effect of law,” stating:
The rules of the real estate department at the time this contract was made require that all real estate listings be in writing and that each listing agreement have a definite expiration date…. Since this rule is applicable to this contract, then the contract cannot be enforced since it is unlawful.
And finally the Court noted:
“Read together, our statutes establish that a real estate agent may sue to recover compensation due under a real estate employment agreement only if there is a written agreement that complies with both A.R.S. §§ 44–101(7) and 32–2151.02(A). The result in this case may appear harsh, especially because the parties to be charged—the Roses—signed the 2009 Agreement. But see Gray v. Kohlhase, 18 Ariz.App. 368, 371, 502 P.2d 169, 172 (1972) (quoting Pac. Sw. Dev. Corp. v. W. Pac. R.R. Co., 47 Cal.2d 62, 301 P.2d 825 (1956)) (“Although denial of a commission … may seem harsh, Plaintiff is a licensed real estate broker and, as such, is presumed to know” the law). Both sides articulate policy arguments supporting their respective positions. Ultimately, though, it is within the legislative province to dictate the requirements for enforceable real estate employment agreements. Should the legislature wish to permit civil enforcement of real estate employment agreements that violate A.R.S. § 32–2151.02(A), it may do so through statutory amendments.”

Don’t let these basic blunders keep you from earning a real estate commission in Arizona.  Click here to watch a video case brief of the Young v. Rose case by Attorney Steve.

For more information call us

We help brokers and real estate buyers (i.e. we can rep both buyers and sellers agents, and property owners) fight for their legal rights seeking justice while being mindful of trying to resolve each case (whether litigation or arbitration) in a way in that can potentially allow the disputing parties to remain on a friendly terms basis.  It is a small real estate community in most local areas, and staying amicable with the agents and clients you meet can help you in your career in the long run,

Call us to license a sample buyer’s exclusive agency contract with sample arbitration addendum, or to get solid legal advice on your case or to discuss alternative forms of dispute resolution/mediation or simply to retain us to handle your breach of contract state or federal court case.

Our number is (877) 276-5084, or fill out the contact form below and we will call you.



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