Broker’s Commission on Exclusive Right to Sell Listing Law Elements Lawsuit Defense Lawyer
Definition
“Exclusive right to sell listing agreement” means a listing agreement whereby the owner grants to a seller’s agent, for a specified period of time, the exclusive right to sell, find, or obtain a buyer for the real property, and the seller’s agent is entitled to the agreed compensation if, during that period of time, the real property is sold, no matter who effected the sale, or when the seller’s agent receives and presents to the owner any enforceable offer from a ready, able, and willing buyer on terms that are authorized by the listing agreement or accepted by the owner. An “exclusive right to sell listing agreement” may provide for compensation to the seller’s agent if the property is sold within a specified period after termination of the listing agreement. (See Cal. Civ. Code, § 1086, subd. (a); Cal. Bus. Prof. Code, § 10018.15; Howard Gitlen & Associates, Inc. v. Ameri (1989) 208 Cal.App.3d 90.)
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Element 1: Exclusive Right to Sell Listing
In an exclusive right to sell listing, the owner grants to an agent, for a specified period of time, the exclusive right to sell or to find or obtain a buyer for the specified property.
“Exclusive right to sell listing agreement” means a listing agreement whereby the owner grants to a seller’s agent, for a specified period of time, the exclusive right to sell, find, or obtain a buyer for the real property, and the seller’s agent is entitled to the agreed compensation if, during that period of time, the real property is sold, no matter who effected the sale, or when the seller’s agent receives and presents to the owner any enforceable offer from a ready, able, and willing buyer on terms that are authorized by the listing agreement or accepted by the owner. An “exclusive right to sell listing agreement” may provide for compensation to the seller’s agent if the property is sold within a specified period after termination of the listing agreement.” (Cal. Bus. Prof. Code, § 10018.15.)
Element 2: Written Listing Agreement
“Listing agreement” means a written contract between a seller of real property or a business opportunity and a real estate broker by which the broker has been authorized to sell the real property or find or obtain a buyer, including rendering other services for which a real estate license is required to the seller pursuant to the terms of the agreement. A “listing agreement” includes an “exclusive right to sell listing agreement,” “seller reserved listing agreement,” and “open listing agreement.” (Cal. Bus. Prof. Code, § 10018.14.)
Element 3: Definite Termination Date
A listing agreement that does not contain a definite termination date is not necessarily void, and the listing agent may be entitled to the commission if he has performed, no moral turpitude is involved, and denial of commission would unjustly enrich the owner. (Babcock v. Houston (1973) 33 Cal.App.3d 858, 863.)
An exclusive right to sell listing agreement that provides a stated period during which the listing agent has the exclusive right to sell is irrevocable for the time period stated. (Tetrick v. Sloan (1959) 170 Cal.App.2d 540, 546-47.)
To be entitled to a commission, the listing agent must perform his services during the term of the listing agreement or any written extensions thereof. (Augustine v. Trucco (1954) 124 Cal.App.2d 229, 237.)
Element 4: Licensed Real Estate Broker
The listing agent must have had a valid real estate broker’s license at the time the cause of action arose. (Cal. Bus. & Prof. Code, § 10136.)
If the listing agent had a valid real estate license at the time the cause of action arose, his lack of the proper license at the time he entered into the listing agreement does not defeat his claim to a commission. (Estate of Lopez (1992) 8 Cal.App.4th 317, 324.)
Element 5: Sale or Procurement of Ready, Willing and Able Buyer
The term “sale” means that there is a legally binding commitment to sell, lease or exchange the property. (Cal. Bus. Prof. Code, § 10018.10.) The listing agent earns his commission when he procures a ready, willing and able buyer, regardless of whether the buyer and owner have entered into a binding written purchase agreement. (Woodbridge Realty v. Plymouth Dev. Corp. (1955) 130 Cal.App.2d 270, 279.)
During Term of Listing Agreement:
Upon a sale during the term of an exclusive right to sell agreement, the listing agent is entitled to his commission even if he was not the procuring cause of the sale and even if he could not have performed by tendering a satisfactory buyer. (Metzenbaum v. R.O.S. Associates (1986) 188 Cal.App.3d 202, 210-11; Carlsen v. Zane (1968) 261 Cal.App.2d 399, 402; Walter v. Libby (1945) 72 Cal.App.2d 138, 141-42.)
A full commission is due if the owner sells the property, even if the listing agent has made no effort, nor occurred any expense in marketing the property. (People v. National Assoc. of Realtors (1984) 120 Cal.App.3d 459, 477.)
A listing agent was not entitled to a commission when the property became involved in the settlement of litigation, as such settlement did not constitute a “sale or exchange” under the listing agreement. (Howard Gitlen & Associates, Inc. v. Ameri (1989) 208 Cal.App.3d 90, 96.)
The owner’s unilateral termination of a listing agreement prior to the termination date specified in the agreement was not the “termination” contemplated by the agreement, and the agent was entitled to its commission when the property was sold by another agent prior to such termination date. (Century 21 Butler Realty, Inc. v. Vasquez (1995) 41 Cal.App.4th 888, 892-93.)
During “Safety Clause” Period:
Where a listing agreement provided a “safety clause” that the listing agent is entitled to his commission if the property is sold within 90 days after termination of the listing agreement to anyone whose name is “registered with [the owner] in writing as of the termination date,” the listing agent was entitled to the full commission when the property was sold during such 90-day period to a person so registered with the owner, even though the listing agent only contacted such buyer twice and never even showed the property to him. (Leonard v. Fallas (1959) 51 Cal.2d 649, 652 [irrelevant that broker was not procuring cause].)
If the “safety clause” provides for payment of the commission when the property is sold to anyone with whom the listing agent has “negotiated” a potential sale during the term of the listing and such sale occurs after the listing agreement has expired, then the listing agent need not establish that he was the procuring cause of the sale to be entitled to his commission. (Delbon v. Brazil (1955) 134 Cal.App.2d 461, 464.)
Where the listing agreement provided for payment of commission if the property is sold within three months after the termination date to anyone with whom the listing agent had “negotiations prior to the termination date,” the agent was not entitled to a commission upon the sale during this “safety clause” period to a buyer to whom he never showed the property or with whom he never negotiated. (Simank Realty, Inc. v. De Marco (1970) 6 Cal.App.3d 610, 617.)
Where the listing agreement provided for payment of commission upon a “sale, lease or other transfer” of the property within three months after termination of the agreement, the listing agent was entitled to the commission when the owner entered into a lease with a party procured by the listing agent two weeks after termination of the agreement. (Al Herd, Inc. v. Isaac (1969) 271 Cal.App.2d 749, 752 [negotiating for lease rather than sale did not defeat broker’s right to commission].)
After Listing Has Expired:
Where a sale was made after the termination of an exclusive right to sell agreement and the “safety clause” therein, the listing agent was entitled to a commission where he was the procuring cause of the sale before the termination of the listing agreement, even though the exact terms were not agreed upon until after the termination of the listing agreement. (Wilson v. Roppolo (1962) 207 Cal.App.2d 276, 281-83.)
Although an oral agreement to extend the time period under a listing agreement is generally invalid, the listing agent is entitled to a commission when he procures a buyer after the expiration of the listing agreement if the owner waives the time limit. (Augustine v. Trucco (1954) 124 Cal.App.2d 229, 237; Baker v. Curtis (1951) 105 Cal.App.2d 663, 669-70; see also Kraemer v. Smith (1960) 179 Cal.App.2d 52, 57 [owner waived time limit by encouraging listing agent to continue efforts to sell property after listing agreement expired and by not objecting to or disapproving such efforts at any time].)
Procurement of Ready, Willing and Able Buyer:
Once a listing agent produces a ready, willing and able buyer, the listing agent’s right to a commission accrues when the contract of sale is executed or when the opportunity to make such a written contract is given to the owner, even if the owner is unable or unwilling to complete the sale. (Seck v. Foulks (1972) 25 Cal.App.3d 556, 572-73.)
Listing agent earned commission upon procuring a satisfactory tenant who was willing to lease on the owner’s terms. (W. Ross Campbell Co. v. Peskin (1958) 162 Cal.App.2d 225, 231.)
Remedies
Recovery of Commission
Measure of damages is the maximum commission provided for in agreement. (McGuire v. More-Gas Investments, LLC (2013) 220 Cal.App.4th 512; Blank v. Borden (1974) 11 Cal.3d 963, 968-70.)
Compensatory Damages
Mortgage loan broker was not entitled to compensation or damages under agreement which did not specifically provide for payment of commission on borrower’s repudiation of agreement absent showing that broker could have earned commission if repudiation had not occurred. (Never v. King (1969) 276 Cal.App.2d 461, 471-79.)
Statute of Limitations
The statute of limitations is four years. The limitations period generally commences when the listing agent produces a ready, willing and able buyer for the property. (Cal. Civ. Proc. Code, § 337(1).)
Affirmative Defenses
Failure to Comply with License Requirements
No person engaged in the business or acting in the capacity of a real estate broker or a real estate salesperson within this state shall bring or maintain any action in the courts of this state for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he or she was a duly licensed real estate broker or real estate salesperson at the time the alleged cause of action arose. (Cal. Bus. & Prof. Code, § 10136.)
Failure to Disclose Dual Agency
Listing agreement was voidable at seller’s option due to agent/broker’s failure to provide statutorily required disclosure form. (Huijers v. DeMarrais (1992) 11 Cal.App.4th 676, 685-86.)