I. BROKERAGE LAW
a. BROKER’S FIDUCIARY OBLIGATIONS TO THE PARTIES
i. Broker’s Duty to Seller as Principal
1. Hale v. Wolfsen (Cal. 1969) (pg. 2)
a. Real estate brokers are under a duty to deal fairly with all parties, and be well informed on current market conditions
ii. Broker’s Duty to Buyer
1. Keyerleber v. Euclid Congregation of Jehovah’s Witnesses (OH 1957) (pg. 8)
a. A person seeking rescission of a K on ground of fraud must exercise the right promptly upon discovery of the fraud and that any delay or act inconsistent with the degree of promptness required by the circumstances is a bar to relief and constitutes a defense to the proceeding
b. KEY ELEMENTS OF A BROKERAGE CONTRACT
i. Statute of Frauds and Other Writing Requirements
ii. Three Types of Listing Agreements
1. An open listing
2. Exclusive agency
3. Agency with exclusive right to sell
iii. Evaluating the Broker’s Performance in Light of the Listing Agreement
1. “Procuring Cause”
a. Factors courts consider in deciding whether to hold the seller liable for a commission in “procuring cause” dispute are:
i. Whether seller knew the purchaser learned of the property through the broker’s efforts
ii. Length of time after listing expiration before sales agreement is entered
iii. How much haggling did parties do to change terms on which property was initially offered?
1. If listing or first offer price exceeds final sales price by amount of commission this is an easy case for broker to win
2. “Exclusive Right to Sell or Exchange”
a. John Whiteman & Co. v. Fidei (PA 1954) (pg. 22)
i. The two basic elements of “sale or exchange” are:
1. A transfer of property from one person to another
2. A valuable recompense
3. “Ready, Willing and Able”
a. Gaynor v. Laverdure (Mass. 1973) (pg. 25)
i. Broker is entitled to commission when broker produces purchaser ready, able and willing to purchase seller’s property. The commission is not barred if it turns out later that buyer is unable to pay for property.
4. White Realty & Insurance Agency Co. v. Moreland (PA 1969) (pg. 34)
a. Broker has not fulfilled the terms of his oral contract to sell realty where he has negotiated a conditional sales agreement except where the fulfillment of the condition of the sales agreement is entirely within the control of the seller.
b. Broker is entitled to commission only where he achieves a result, negotiates a K, deal, or transaction, or procures from a customer an offer or proposed K containing a price, term or condition no different from that which he is authorized to procure
. Seller’s Liability for Refusal to Convey
1. Ide v. Leiser (Mont. 1890) (pg. 64)
a. If one person offers to another to sell his property for a named price, and while the offer is un-retracted the other accepts, tenders the money, and demands the property, that s a sale.
2. Baran v. Goldberg (Cal. 1948) (pg. 70)
a. Specific performance cannot be granted when the sales price is grossly inadequate.
b. Loss of bargain damages (difference between price agreed to be paid and value of the estate agreed to be conveyed) can be recovered for the breach of an agreement to convey real property only in “case of bad faith”
b. EFFECTING A REAL ESTATE SALE
i. Judicial Interlineation
1. McWilliams v. Mulgrew (N.Y. 1953) (pg. 76)
a. In an all cash transaction, where a broker produces a buyer, ready, willing, and able to pay the price fixed by the seller, that broker has complied with the terms of his employment and no further act on his part is required in order to entitle him to his commission.
Hazards of Drafting Damage Provisions